The markets dipped lower in anticipation of this morning’s USDA World Agriculture Supply and Demand Estimates report following USDA’s market-upsetting reports on grain stocks and plantings issued a couple of weeks agp. After a spring of wet weather and other factors heating markets up, the new reports are releasing the steam.

In corn, higher projected beginning stocks for the new marketing year starting in September and higher estimates for corn production are boosting USDA’s projections for 2011-’12 feed grain supplies. Corn beginning stocks are raised 150 million bushels reflecting changes to 2010-’11 usage projections, including corn use for ethanol being raised 100 million bushels with larger supplies and an improved outlook for ethanol producer margins. Corn production for 2011-’12 is projected 270 million bushels higher based on planted and harvested area as reported in the recent acreage report. Feed and residual use for 2011-’12 is raised 50 million bushels with larger supplies and lower expected prices. Exports are raised 100 million bushels mostly reflecting increased demand from China. Ending stocks for 2011-’12 are projected 175 million bushels higher at 870 million. The 2011-’12 season-average farm price for corn is projected at a record $5.50 to $6.50 per bushel, down 50 cents on both ends of the range.

Total U.S. corn use for the current marketing year, 2010-’11, is projected 145 million bushels lower mostly reflecting the larger-than-expected June 1 stocks estimate. Feed and residual use is lowered 150 million bushels. Ethanol use is raised 50 million bushels with larger supplies and improved ethanol producer margins. Partly offsetting is a 20-million-bushel reduction in use for sweeteners reflecting slower demand from Mexico. Corn exports are lowered 25 million bushels based on the slower-than-expected pace of shipments in recent weeks. Imports are raised 5 million bushels with continued strong shipments from Canada. Ending stocks for 2010-’11 are raised 150 million bushels to 880 million. The season-average farm price is projected at $5.15 to $5.35 per bushel compared with $5.20 to $5.50 last month.

Global coarse grain supplies for 2011-’12 are projected 10.3 million tons higher mostly on higher corn beginning stocks and production in the United States. Foreign coarse grain beginning stocks changes are mostly offsetting with corn carryin lowered 0.5 million tons for Canada and barley carryin raised 0.2 million tons and 0.3 million tons, respectively, for Argentina and Australia. Foreign corn production is lowered 0.6 million tons. Corn production is lowered 0.5 million tons each for Mexico and Russia, and 0.2 million tons for Canada. Ukraine corn production is raised 0.5 million tons and production for Belarus is raised 0.2 million tons. 

Global corn trade for 2011-’12 is raised with higher imports for China. China corn imports are raised 1.5 million tons to 2.0 million reflecting the recently announced sale to China and favorable pricing opportunities for U.S. corn into southern China where growing demand is reducing stocks. Corn exports are lowered 0.5 million tons for Canada and 0.2 million tons each for Mexico and Russia, partly offsetting the U.S. increase. Global corn consumption is raised 5.9 million tons with higher expected feeding in China, the United States, and Ukraine, and higher industrial use expected in the United States and Canada. Global corn ending stocks are projected 3.8 million tons higher with the U.S. increase only partly offset by reductions for Canada and Mexico.