US corn prices jump on tighter supply estimate for the year

09 February 2011 18:32  [Source: ICIS news]

HOUSTON (ICIS)--US corn futures prices jumped on commodity exchanges on Wednesday as the US Department of Agriculture (USDA) reported a tightening of estimated corn supplies.

The USDA’s February World Agriculture Supply and Demand Estimate (WASDE) report forecast corn marketing year ending stocks at 675m bushels, down 70m bushels from the January estimate. The 2010-2011 corn marketing year ends on 31 August, 2011.

At the Chicago Mercantile Exchange, the midday March corn price was $6.91/bushel, up 18 cents/bushel form the prior day’s close.

The change in corn-ending stocks (the supply minus the amount used) resulted from slight increases in the estimates of corn used for ethanol, sweeteners and starch, the USDA said.

“These revisions will add fuel to the speculative fire, likely pushing prices for corn and other commodities higher,” said Renewable Fuel Association (RFA) spokesman Matt Hartwig.

“Many will use strong ethanol demand as the rationale to drive the price of corn futures as high as the market will bear,” Hartwig said. “In turn, this will likely cause ill-informed industries and talking heads to pronounce US ethanol production as the root cause of food inflation the world over."

The RFA noted that US ethanol production uses 3% of the world’s grain supply on a net basis. Moreover, the industry uses strictly coarse grains, not food grains like rice and wheat.

In other crops, the USDA said soybean supply and use projections for 2010/2011 are unchanged this month, leaving ending stocks at 140m bushels.

Soybean oil used for biodiesel during the first quarter of the marketing year was the lowest in six years, the USDA said.

Projected soybean use for biodiesel production is expected to accelerate because of the 2011 mandate and the return of the $1/gal blending credit.

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By: Frank Zaworski
+1 713 525 2653



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