USDA's month of April projected ending stocks for corn at 1.238 billion bushels was within the trade range of pre-released estimates. Allendale views the domestic data as neutral. However world stocks of corn shrank by more than 1 million metric tonnes and we view this data as support to old crop futures. Corn use for ethanol was lowered 100 million bushels, but its loss was more than offset by increased exports and feed and residual usage.
USDA did suggest the reason for the reduction in corn use was because not as many new ethanol plants were coming on line as fast as predicted. Please view the chart below and you can view how profit margins actually decreased based on Allendale's research. Allendale did report to you on March 28th, based on the pace of corn use for ethanol, USDA needed to adjust its outlook lower by a minimum of 69 million bushels. Even with record production of ethanol, it was not enough to clear the USDA projection bar.
Domestic Stocks and Stocks-to-Use are presently estimated at 1.238 billion bushels versus March's 1.438 billion bushels and compares to 1.304 billion bushels last year. Stocks to use of 9.8% is lower than last month's 11.1% and compares to last years 11.6% In 2005 stocks-to-use was 17.5%. At 9.8%, this represents the third lowest domestic ending stocks-to-use dating back to 1980, with 2003 at 9.4% and 1995 remains the record low at 5%.
World Stocks of 103 million tonnes versus last months 104.03 million tonnes compares to last years 108 million tonnes and remains as the second tightest on record dating back to 1980, with 89 million tonnes the tightest in 1983. Ending stocks-to-use at 11.8% compares to 12% last month and are the tightest on record dating back to 1980. World STU were at 13.3% in 2006 and the record high STU was at 40.8% in 1986.
USDA's March estimated season average farm price of $3.75 to $4.25 (average of $4) was adjusted to $4.30 for the April WASDE report. The season average farm price for the
2006/07 marketing year was at $3.04 or $1.26/bushel lower.
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