WASDE report: Corn prices up, ethanol use down

By Susanne Retka Schill | April 08, 2008
Web exclusive posted April 14, 2008 at 12:20 p.m. CST

In the April 9 USDA World Agricultural Supply and Demand Estimate report, the USDA boosted its projected season average farm price for corn, but its projections for ethanol corn use by 100 million bushels due to the slowing pace of new ethanol plant startups as previously projected. Rising ethanol prices continue to support producer margins, and the USDA projects capacity utilization for existing plants to remain strong.

As new crop futures pushed over $6, the WASDE report projected a $4.10 to $4.50 per bushel season average price at the farm compared to last month's projections of $3.75 to $4.25 per bushel. Record use during the first six months of the 2007-2008 marketing year and prospects for smaller-than-expected production in 2008 are expected to support cash and futures prices near current record levels through the summer. Overall, U.S. corn ending stocks for 2007-2008 are projected 155 million bushels lower this month as increases in feed and residual use and exports more than offset a reduction in corn use for ethanol. Feed and residual use is projected 200 million bushels higher as March 1 stocks indicated higher-than-expected disappearance during the December-February quarter. Exports are projected 50 million bushels higher based on the strong pace of shipments.

Other U.S feed grain changes this month include a 10-million-bushel reduction for sorghum feed and residual use. Earlier in the week, USDA's first weekly crop progress report for the season showed Texas has 53 percent of the sorghum crop planted as of the first week of April, slightly ahead of the five year average of 42 percent. Louisiana had 16 percent of the crop planted, although only 20 percent of the total crop was seeded across the 11 states planting 95 percent of the nation's sorghum crop.

World coarse grain stocks are projected lower this month with corn ending stocks down 1.1 million tons. The largest change is the 3.9-million-ton reduction projected for U.S. corn ending stocks. Partly offsetting are increases for Iran, Mexico, the European Union and Egypt.

In contrast to corn, the USDA price forecasts for soybeans, soybean oil and soybean meal are all reduced this month. The U.S. season-average soybean price range is projected at $10.00 to $10.50 per bushel, down 30 cents on the high end of the range. The soybean meal price is projected at $315 to $335 per short ton, down $5 on the low end and down $15 on the high end of the range. The soybean oil price is projected at 50 to 54 cents per pound, down 3 cents on both ends of the range. Despite record high soybean prices, exports have remained strong, especially to China, where imports from the United States are likely to exceed the 2004-2005 record. U.S. soybean exports for 2007-2008 are increased 50 million bushels to 1,075 million this month reflecting strong year-to-date shipments. Soybean crush is raised 5 million bushels to a record 1,840 million bushels, mainly on stronger-than-expected soybean meal and oil exports. U.S. soybean ending stocks are raised 20 million bushels to 160 million, still down sharply from the record level set in 2006-2007.