January 7, 2011 / 8:28 PM / 8 years ago

RPT-PREVIEW-U.S. corn stocks seen at 15-year low

 * WHAT: USDA Jan crop, s/d, stocks, acres reports
 * WHEN: Wednesday, Jan. 12, 7:30 a.m. CST (1330 GMT)
 * Production drop, big demand shrinking corn stocks
 * U.S. corn supply seen falling to 15-year low
 * Corn use for ethanol nearing 40 percent of production
 (Repeats to fix Web link to grain stocks graphic, insert link
to corn p[roduction poll)
 By Sam Nelson
 CHICAGO, Jan 7 (Reuters) - U.S. corn stocks are expected to
slump to the lowest level in 15 years this year due to strong
demand, possibly stoking global food prices which hit a record
high last month, a Reuters Poll of analysts showed.
 Analysts also said harsh weather cut corn output to 12.502
billion bushels from the previous year's record 13.110 billion
and below the U.S. Department of Agriculture's (USDA) forecast
in November for 12.540 billion bushels.
 "If the USDA begins to lower production in the fall,
there's usually another reduction in the January report," said
Jack Scoville, an analyst for The Price Group.
 The USDA will release its January crop production,
supply/demand, quarterly stocks and winter wheat acreage
reports at 7:30 a.m. CST (1330 GMT) on Wednesday. The Jan. 12
report will be the USDA's final estimate of corn production.
 Global food prices rose to a record high in December, said
U.N.'s Food and Agricultural Organization on Wednesday as its
Food Price Index surpassed the high in 2008, when food riots
broke out in some countries.[ID:nL3E7C6080]
 The world's biggest economies are working to find ways to
bring down soaring food prices, a G20 official said on Friday,
as high food prices and unemployment were blamed for a second
day of rioting in Algeria. [ID:nL3E7C70I1] [ID:nCHI753744]
  Graphic on grain stocks   r.reuters.com/zex35r
  Poll on corn production               [ID:nN07410138]
 The USDA has kept slashing its outlook for 2010 U.S. corn
production since projecting production in August at a huge
record large 13.365 billion bushels.
 The waning output comes at a time corn used for feed,
exports and ethanol remains robust, shrinking corn stocks to a
projected 779 million bushels, according to an average of
analysts' estimates. [ID:nN07415983]
 That would be the smallest stockpile of corn since 426
million at the end of the 1995/96 season, a year following a
drought that slashed corn production.
 "If you cut corn production another 200 million bushels
you're getting an extremely bullish carryout number," said Tim
Hannagan, analyst for PFG Best.
 The stocks-to-use ratio this season could drop below 6.0
(approximately 5.8), also a 15-year low. The stocks-to-use
ratio fell to 4.98 in the 1995/96 crop year.
 Analysts think the amount of corn exported and fed by the
United States may remain relatively stable but they expect corn
used to produce ethanol to approach 40 percent of production,
above the current USDA projection of 4.8 billion bushels.
 "The ethanol can change, but so far ethanol production is
more on target to hit 5 billion so we took our estimate up 100
million to 4.9 million," said Don Roose, analyst with U.S.
 "I think the latter part of the year we saw good ethanol
margins and that drew more corn into use for ethanol." said
Chris Manns, president of Traders Group Inc.
 Manns also pegged corn use for ethanol at 4.9 billion
bushels, but some analysts were zeroing in on the 5.0 billion
bushel mark.
 An analyst average forecast global corn supplies at 127.532
million tonnes, down from the USDA's forecast in December for
130.0 million.
 "There will be a global decline for stocks of wheat, corn
and for beans. The drought problems in the Black Sea and
flooding in Australia cut into wheat and corn and there
continues to be good usage out of China," Manns said.
 An increased amount of feed wheat in the world this year
may take some of the pressure off corn as a prime feed
 Excessive rainfall in Australia, a key global wheat
producer, and an unprecedented drought this summer in Russia's
Black Sea grain region led to outlooks for increased supplies
of feed wheat.
 Manns said global feed wheat supplies may increase a
million tonnes or more and that would displace some U.S. corn
export business.
 Iowa Grain analyst Justin Kelly said global feed wheat
supplies may increase as much as 5.0 million tonnes this year.
 (Reporting by Sam Nelson; Editing by Marguerita Choy)

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