(DTN) -- USDA bucked market expectations today with its April supply-demand estimates by keeping corn and soybean stocks at the same levels as March numbers though the trade estimates had generally projected lower stocks in both.

Despite pegging U.S. corn ethanol use at a record-high 5 billion bushels for this marketing year, USDA kept U.S. corn ending stocks at a projected 675 million bushels by lowering projected feed use.

Soybean ending stocks also remained the same at 140 million bushels because of lower export numbers due to international competition.

USDA also countered the trade estimates by lowering wheat ending stocks slightly even though the market had largely forecast higher ending wheat stocks.

The reports should be viewed as bearish for corn, neutral for beans and neutral to bullish for wheat if the numbers are taken at face value, said DTN Analyst John Sanow.

U.S. SUPPLY–DEMAND

Corn

In the U.S. tables, USDA's World Ag Outlook Board's April numbers projected an increase in corn use for ethanol, which was offset by a reduction in expected feed and residual use. Corn going to ethanol increased 50 million bushels as the outlook board stated stronger blender incentives and positive ethanol producer margins continue to encourage an expansion of ethanol production and use. The report now puts U.S. ethanol use of corn at 5 billion bushels. Rising gasoline prices have pulled ethanol prices higher, helping to offset increases in corn feedstock costs for ethanol producers.

U.S. corn feed and residual use was lowered by 50 million bushels compared to the March estimates. The report also held steady on exports, keeping corn exports at an estimated 1.95 billion bushels. The report pegs the season average corn price at $5.20 to $5.60 per bushel.

"USDA surprised traders by leaving corn stocks unchanged at 675 mb. And while this is 80 mb above the average estimate, it does keep ending stocks to use at the tightest level on record of 5 percent and does nothing to change the bullish market structure longer-term," Sanow said. "Headlines this morning are talking about 'demand destruction,' which feels a lot like Chicken Little screaming 'the sky is falling' to me."

Soybeans

Standing firm on soybean stocks as well, the WASDE report lowered soybean exports by 10 million bushels from the March report. Exports were lowered because of increased competition expected due to larger crops in Brazil and Paraguay, keeping soybean exports at 1.58 billion bushels. Despite slightly lower exports, the average soybean price range was raised to 15 cents to 35 cents a bushel to a range of $11.25 to $11.75 per bushel

Wheat

U.S. slightly lowered its ending wheat stocks for 2010-11 to reflect a small increase in seed use. That was due to higher planting area reported in last week's prospective planting report, which raised seed use by 4 million bushels. The average price forecast was lowered 10 cents a bushels to a range of $5.50 to $.5.70 a bushel.

"In wheat, a 4 mb decrease may give the market a small shot in the arm, as traders were expecting a modest increase," Sanow said.

WORLD SUPPLY AND DEMAND

In its world tables, global corn production was raised 1.2 million metric tons with big increases in production from Brazil, Paraguay and Uganda. Brazil's production was raised 2 mmt with higher reported planting area and yields. Still, increased global corn trade raised import totals for countries such as Indonesia and China. World corn ending stocks fell marginally, from 123.14 million metric tons in March to 122.4 mmt, which still kept overall stock levels higher than trade expectations.

World soybean ending stocks were pegged at 60.94 mmt, up slightly from last month, but also forecast higher than the average trade projections. Brazil's crop was bumped up 2 mmt to 72.0 mmt from 70.0 mmt in March, which was right in line with analyst projections. Argentina's was unchanged from March.

In world wheat supply and demand, USDA boosted ending stocks to 182.83 mmt, from 181.9 mmt in the March report. Australian and Canadian wheat production both remained unchanged from March.

"World ending stocks should be viewed as neutral for corn, bearish for soybeans, and slightly bearish for wheat," Sanow said. "All three grains came in above the average estimates with beans a full 2 mmt above the average on a like increase to Brazilian production. Corn, while above the average guess, was lower than the March estimate. Wheat came in above both."

The next WASDE report will be May 11.

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