U.S. corn consumption is forecast to be stronger than expected into next year as ethanol and foreign consumers have increased demand for the crop, the U.S. government told, as users take advantage of cheaper prices.
In its monthly report highlighting supply and demand for U.S. crops, the Agriculture Department boosted its demand for corn used to produce ethanol by 50 million bushels to 4.950 billion, reflecting a strong uptick in production of the corn-based fuel since mid-October. Corn prices are seen averaging $4.40 through August of next year compared to $6.89 in the prior marketing year.
The surge in ethanol output, coupled with higher foreign demand for corn, lead USDA to lower stockpiles at the end of next August to 1.79 billion, a decline of 95 million bushels from its estimated in early November. Even though USDA lowered it end stock estimate, it would still be the largest carryover in eight years.
U.S. corn and soybean production was left unchanged Tuesday by USDA. Farmers are seen producing a record 13.989 billion bushels of maize and 3.258 billion bushels of soybeans. The increase in output has pushed corn prices lower by 38 percent this year while soybeans are down a more modest 5 percent.