Indiana Grain Company, LLC

Posted: 02/10/10

By: tomgrisafi

Corn rose for a second day Tuesday after the U.S. said demand from ethanol producers will be more than expected last month, eroding domestic inventories left over from the biggest crop ever.

Demand for corn to make ethanol will jump 17 percent this year, leaving 1.719 billion bushels in storage as of Aug. 31, before the harvest, the U.S. Department of Agriculture said today in a report. A month ago, the agency estimated 1.764 billion, and analysts surveyed by Bloomberg expected 1.747 billion. Before today, corn prices slipped 14 percent this year.

“Demand for energy produced from corn is improving,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “Ethanol profit margins are rising and that may further increase demand for corn.”

Corn futures for March delivery rose 2.5 cents, or 0.7 percent, to $3.585 a bushel on the Chicago Board of Trade, after rising 1.3 percent yesterday. Prices have dropped for four straight weeks.

Ethanol processors will use 4.3 billion bushels of corn, more than last month’s estimate of 4.2 billion and last year’s total of 3.677 billion, the USDA said. Total domestic use by makers of fuel, feed and food products will increase 9 percent to 11.115 billion bushels from a year earlier, the agency said.

Source: Forbes, WSJ