This morning the USDA updated both US and World 2008/09 balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates (WASDE) report. We see today's report as slightly bullish as the report continues to provide long-term support for corn.

The USDA lowered their estimate for U.S. corn ending stocks for 2008/09 by 50 million bushels as higher ethanol use more than offsets a reduction in exports. Corn use for ethanol is projected 100 million bushels higher on indications of improving blender incentives and higher ethanol use. The USDA also increased their 2008/09 season-average farm price for corn to $3.90 to $4.30 per bushel from $3.65 to $4.15 last month. World corn production for 2008/09 is raised 0.6 million tons as an increase for South Africa more than offsets downward post-harvest revisions for India and Kenya.

U.S. soybean ending stocks for 2008/09 were lowered 25 million bushels to 185 million bushels as increased soybean exports are only partly offset by lower crush. Exports were raised 35 million bushels to 1.185 billion reflecting record sales to China and reduced export competition from Argentina.

U.S. Grains Council's Vice Chairman Rick Fruth commented that "This is good news for U.S. corn growers and the U.S. ethanol industry, which was stumbling as a result of the current economic situation" and "The ethanol industry is extremely important for the sustainability of rural America."

We expect to gain more clarity on this year's corn outlook on March 31 when the USDA reports 2009 Prospective Plantings.

Click on the link for the full WASDE report: http://www.usda.gov/oce/commodity/wasde/.

- Colvin