With financial and macroeconomic developments continuing to weaken, USDA lowered it corn demand outlook for 2008/2009. Corn used to produce ethyl alcohol for fuel is lower because of financial problems in the ethanol industry. Corn and sorghum exports are also lower due to weak demand.
World 2008/2009 coarse grain ending stocks are now projected higher than beginning stocks. In previous months, forecasts showed global coarse grain stocks declining year-to-year. U.S. corn and sorghum farm prices are projected lower this month, oats prices are unchanged, and barley prices are raised because of high contracted malting barley prices.
Meanwhile, feed grain supplies for 2008/2009 are forecast up slightly from November, with increased projections for barley and oat imports. Supplies are down 18.7 million tons from 2007/2008. The supply decrease reflects lower production year-to-year.
Total feed grain use is projected 9 million tons lower at 329.8 million this month. Domestic use of the four feed grains is lowered 6.1 million tons this month. This drop is the result of a decrease in expected corn used for ethanol, which also lowers the availability of distillers’ grains and increases corn and sorghum feed and residual use.
Feed grain exports for 2008/09 are projected down 2.9 million tons this month. The decrease in domestic use and exports results in ending stocks being increased 9.1 million tons to 41.8 million. In 2007/2008, ending stocks for the four feed grains totaled 45.1 million tons, so stocks are still expected to decline during 2009.
Food, seed, and industrial use for 2008/2009 is forecast down 300 million bushels to 5.0 billion this month. This decrease is caused by the decline in ethanol production, as prospects for blending above federally mandated levels diminish. Financial problems for ethanol producers are reducing plant capacity utilization for existing plants and delaying plant openings for those still under construction. Falling gasoline prices have also resulted in high relative prices for ethanol, reducing blender incentives and slowing production.
Source: Economic Research Service- USDA