Supplies of corn in the United States are at comfortable levels despite strong exports and aided by a levelling-off in demand from the ethanol sector, traders and analysts said after a government report on Friday.
Trade expectations for the US Agriculture Department to reduce on average US corn ending stocks at the end of the current marketing year on August 31 were dashed by the agency, which let stand surplus or ending stocks at 1.438 billion bushels.
In hindsight, the traders said that the USDA made most of its downward adjustments to supplies in a previous report in January, that shook the markets. An average of analysts' estimates was for the USDA to trim corn stocks to 1.412 billion bushels due to strong export demand.
But USDA made no changes in its estimate for the amount of corn to be used to feed livestock, export or ethanol sectors. "We thought there was enough evidence that USDA would reduce its corn usage for ethanol, but they left it unchanged," Citigroup analyst Mario Balletto said. Jerry Gidel, analyst for North America Risk Management Inc, was at the low end with a forecast of 1.338 billion while Citigroup pegged the corn stockpile at 1.465 billion, the highest number forecast by the analysts.
"I'm the biggest bull out there, I had the lowest number but I'm not totally surprised by the USDA number. I think that instead of cutting it down and having to maybe come back up this spring, they just left it alone," said Gidel.
In its January report, the USDA shocked the corn market by slashing nearly 300 million bushels from its forecast for the ending corn supply, driving Chicago Board of Trade corn futures up the daily permissible limit of 20 cents per bushel for several trading sessions in a row. "I think the government did its damage in January and that might be it for the year," a veteran corn trader said.
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