WASDE: Corn prices decline, boosting ethanol producer margins

By Hope Deutscher | July 08, 2009
Report posted July 13, 2009, at 4:32 p.m. CST

According to the July 10 World Agricultural Supply and Demand Estimate report, with higher expected corn beginning stocks and production, U.S. feed grain supplies for 2009-'10 are projected higher this month.

Corn production is projected at 12.3 billion bushels, up 355 million bushels from last month, while supplies are projected at 14.1 million bushels, up 335 million bushels from 2008-09.

The 2009-10 marketing-year average farm price for corn is projected at $3.35 to $4.15 per bushel, down 55 cents on both ends of the range.

According to WASDE, the decline in corn prices has boosted ethanol producer margins; however, reduced production of gasoline blends with ethanol in May and June, indicate lower-than-expected ethanol corn use.

Exports were increased by 50 million bushels as lower prices increase the competitiveness of U.S. supplies in the world market. Ending stocks are projected at 1.6 million bushels, up 460 million from last month, but down 220 million from 2008-09. Ending stocks for 2008-09 were raised 170 million bushels as lower domestic use more than offsets an increase in expected exports. The marketing-year average price is projected at $3.95 to $4.15 per bushel, down 15 cents on both ends of the range reflecting sharply lower summer price prospects. Reductions are projected for use in ethanol, sweeteners and starch, and as a result, food, seed, and industrial use was lowered 120 million bushels.

Reflecting higher corn beginning stocks and production in the U.S., global coarse grain supplies for 2009-10 are projected 13 million tons higher this month. Global coarse grain beginning stocks are raised 4.2 million tons with a 5.3-million-ton increase for corn only partly offset by lower beginning stocks for barley, sorghum, and oats.

World coarse grain imports and exports are both projected slightly higher for 2009-10. Global corn feeding is raised 0.8 million tons with higher feeding in the U.S. partly offset by a reduction for Ukraine. Global corn ending stocks are projected at 139.2 million tons, up 13.7 million from last month.