Soaring demand for corn will trim US corn supplies this year from previous estimates, giving investors another reason to buy corn, keeping prices near the current 11-year highs or higher, analysts said.
The US Department of Agriculture (USDA) early Friday will release a slew of key reports including one detailing its forecast for the amount of corn to be in the United States at the end of the current (2007/08) old-crop marketing year which draws to a close at the end of August.
"Psychologically, a lower ending stocks figure will be supportive, but we're still 300-plus million bushels over last year, so I can't get overly excited about it," said Shawn McCambridge, analyst for Prudential Financial.
An average of analysts' estimates in a Reuters poll forecast the 2007/08 US corn ending stocks at 1.709 billion bushels, nearly 100 million bushels below the government's forecast last month for a stockpile of 1.797 billion bushels.
Although the corn supply is expected to be bigger than the carryout last year, the soaring demand from the export, livestock and energy sectors is expected to keep corn on the radar of investors such as the growing legion of cash-rich index funds. Those funds this week began rebalancing their portfolios for 2008 to include increased purchases of Chicago Board of Trade corn futures contracts.