Feed Outlook: Corn Feed & Residual Use Lowered

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Corn supplies for 2009/10 remain unchanged this month. Total corn utilization is projected down 100 million bushels to 12,915 million, up from 12,056 million in 2008/09.



Feed and residual use for 2009/10 is forecast down 100 million bushels this month to 5,450 million. This is a result of the record January ethanol production and March 1 stocks that indicated lower-than-expected disappearance during the December-February quarter. Feed and residual use for the first half of the 2009/10 marketing year, September-February, totaled 3,496 million bushels, compared with 3,570 million bushels in the same period of 2008/09.

FSI use for 2009/10 is projected at 5,565 million bushels, unchanged from last month. In thr first half of 2009/10, corn used for high-fructose corn syrup (HFCS) was down 3 percent from the 217.6 million bushels used in 2008/09. Corn used for HFCS is expected to increase seasonally over the next few months but end the marketing year down 1.3 percent from 2008/09. Corn used to make glucose and dextrose was down 5 percent in the first half of the marketing year and is expected to be down 2.2 percent for the year. Corn used for starch is projected down slightly for 2009/10 as declining demand for construction materials and paper products reduce demand for starch. In the first half of 2009/10, corn used for starch totaled 114 million bushels, down from 116 million in 2008/09.

Projected corn use for ethanol is unchanged from last month at 4,300 million bushels for 2009/10. Ethanol production data are incomplete for the first half of the marketing year, as February data have not been released by the Energy Information Administration (EIA). Monthly ethanol production for January 2010 (the latest available data) was record high at 818,000 barrels per day. Ethanol corn use for February was estimated using weekly EIA data for gasoline blended with alcohol and indications of ethanol plants currently operating. This February estimate combined with reported monthly ethanol production indicates that September- February corn use was up 21 percent from the 1.77 billion bushels used in the first half of 2008/09. Poor margins for ethanol producers and rising ethanol stocks limit  near-term growth in production despite strong price incentives for blending with a large discount for ethanol compared with gasoline. The lack of growth in gasoline consumption is likely constraining ethanol use.

Corn exports for 2009/10 are projected at 1,900 million bushels, unchanged from last month, but up 42 million from the previous year. Corn ending stocks for 2009/10 are projected 100 million bushels higher at 1,899 million. This is up from 1,673 million bushels in 2008/09. The season-average corn price projection is narrowed 5 cents on both ends of the range to $3.50-$3.70 per bushel, compared with $4.06 per bushel in 2008/09.

Source: ERS/USDA, Feed Outlook



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