Arecord five billion bushels of corn will be used to make fuel ethanol, a potential strain on the tightest U.S. corn supply in 15 years, but it will be offset by more use of wheat as a substitute for corn in hog and poultry rations, said the government on April 8.
USDA pegged the carryover at 675 million bushels, unchanged from its March estimate. Traders expected a 13 per cent drop because a report last week showed supplies were dropping faster than thought.
Red-hot demand for corn by livestock feeders, exporters and ethanol makers is draining the U.S. corn stockpile. There will be less than a three-week supply of corn when this year’s crop is ready for havest, said the Agriculture Department.
High petroleum prices will encourage ethanol production, said USDA, so it raised its estimate of corn for ethanol by 50 million bushels, to a record five billion bushels.
It cut its forecast of corn for feed by a similar amount because a large winter wheat crop, to be harvested this spring, will make competitively priced wheat available to hog and poultry feeders. Soft red winter wheat prices are lower than corn on a pound-for-pound basis, said USDA.
In addition, early-maturing corn in southern states could come into the market in August and pad U.S. supplies, said USDA.
China is forecast to import 1.5 million tonnes of corn this year, said USDA. The previous estimate was one million tonnes.
Exporters sold a mammoth 1.25 million tonnes of corn last month to unidentified buyers, commonly believed to be China.