Slumping U.S. corn inventories that sent prices near a record probably won’t fall further because users are seeking alternatives, Department of Agriculture Chief Economist Joe Glauber said.
Producers of livestock are using more wheat in feed rations, and inventories already are the minimum needed for processors to meet commitments, Glauber said today at the North American Agricultural Journalists annual meeting in Washington. Supply also will get a boost from increased planting in the South, where crops are harvested earlier in the year than in the Midwest, he said.
“We have more feed wheat, more attractively-priced feed wheat, that will help the livestock side, and there is some production in the Deep South that could bring that gets harvested earlier,” Glauber said.
On April 8, the government left its estimate of corn inventories before this year’s harvest unchanged at 675 million bushels, the lowest since 1996. Analysts expected demand for ethanol and animal feed to further erode supplies. Still, stockpiles on Sept. 1 will drop 60 percent from 1.708 billion bushels a year earlier, the USDA said in a report.
Corn users “have to ensure that there are certain amounts of stocks on hand,” Glauber said. “A lot of people think we are very close to pipeline levels,” or the minimum necessary to keep products flowing, he said.
Corn, Food Prices
Corn futures have more than doubled in the past year in Chicago because of rising demand. The grain is the biggest U.S. crop, valued at $66.7 billion in 2010. Wheat ranks fourth at $13 billion, behind soybeans and hay.
Global food prices reached a record in February and pared gains in March, according to the United Nations. High food costs and corruption have spurred unrest across the Middle East and northern Africa, ousting leaders in Tunisia and Egypt, the world’s biggest wheat importer. The U.S. is the largest exporter of corn, soybeans and wheat.
The amount of corn used for ethanol will be a record 5 billion bushels, up from 4.95 billion estimated last month, the USDA said. The increase in use will slow as the industry reaches the maximum amount of the biofuel that can be blended into conventional motor fuel and as federal ethanol-use requirements plateau, Glauber said.
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