WASDE: Corn rebounds as US ethanol blunts static SA production

December’s World Agriculture Supply and Demand report from the USDA saw ethanol demand bolster domestic use of corn while cutting stocks, providing support to corn prices that have been under pressure in recent sessions.

The move offset a lack of change to Argentine or Brazilian corn production forecasts, which remained at 42 and 95 million mt respectively despite most analysts expecting production figures to be revised downwards as the two countries suffer weather-related angst.

Analysts had expected Argentine corn production to be in the 41 to 42 million mt range, with Brazil’s production between 86.9 and 95 million mt.

Domestically, US ethanol production has hit an impressive streak regularly topping 1 million barrels a day and establishing a new production record of 1.1 million b/d in last week’s EIA data.

However, market sources have warned that with driving season waning and winter weather descending, it will be difficult to maintain production at current levels.

“Ethanol margins are precarious, especially through the first quarter of 2018, stock levels are off the charts… we need exports,” one market source said.

With total use revised upwards to 14.485 million bu, ending stocks fell towards the lower end of analysts’ expectations - revised downward to 2.437 billion bushels – a fall of 50 million bushels.

That helped reverse losses seen earlier in the day on the front month CBOT December corn contract, which added just over 2 cents/bu in the aftermath of the report’s release, to $3.3875/bu.