Potential record corn production in the U.S. and steady demand from ethanol makers may pressure prices of the grain, said Joseph Glauber, the chief economist for the U.S. Department of Agriculture.
U.S. corn production at a record 14.79 billion bushels may help ease global stockpiles that tightened in the previous crop year, Glauber said today at the International Grains Council’s annual conference in London. Consumption of ethanol, a corn-based gasoline additive, may be “relatively flat” because high prices have curbed fuel demand and last year the U.S. let a tax credit for refiners expire, he said.
“Assuming normal crop yields in the U.S. and indeed if we get record crop yields, we should be looking at record production,” he said. “Assuming flat growth in ethanol, that should mean some substantial rebuilding in corn stocks, which certainly helps with volatility and brings down corn prices significantly, although still high.”
About 5 billion bushels of the U.S. corn crop will be used to make ethanol in the year beginning Sept. 1, unchanged from a year earlier, the USDA said May 10.
The USDA is scheduled to update its U.S. and world supply and demand forecasts on June 12. The agency may cut its estimate for world corn stockpiles to 127.48 million metric tons, according to a Bloomberg News survey of 18 analysts. That compares with a May forecast of 127.56 million and inventories a year earlier at 124.43 million.
Corn futures have slipped about 8.7 percent this year on the Chicago Board of Trade on the outlook for a larger harvest. The price traded at $5.905 a bushel today at 1:15 p.m. London time, after touching $5.9325, a two-week high.