U.S. ethanol plants will use more corn than had been projected earlier in the current marketing year and maintain that level in the next marketing year, according to the latest Agriculture Department forecast that raised ethanol industry corn demand for a second straight month.

The agency's May World Agricultural Supply and Demand Estimates released on Friday said ethanol producers are expected to run through about 5.45 billion bu of corn in the 2023-2024 marketing year that ends in August. The latest projection is 1% higher than the April report. Over the last two months, USDA has increased its ethanol corn forecast by 1.4%, or 750 million bu. If realized, corn-to-ethanol projections in the current year would be 5.3% above what the agency estimated for the 2022-2023 marketing year.

The forecast also offered the agency's first take on expectations for the upcoming 2024-2025 marketing year. USDA said it expects corn used for ethanol production will likely hold at 5.45 billion bu, on projections of "essentially flat" U.S. gasoline production, the report said.

USDA provided corn inventory forecasts that are more bullish than that projected by many pre-report forecasts. The latest 2023-2024 corn inventory carry was estimated at 2.022 billion bu, down by 100 million bu, or more than three times the expected cut. While USDA's initial forecast of about 14.86 billion bu of corn output in 2024-2025 largely met industry expectations, it is 3.3% below the current-year estimate the report left unchanged at 15.372 billion bu. And the 2.102 billion bu corn carry forecast for next year is also 7%-8% below what many analysts were expecting.

"The 2024-2025 U.S. corn outlook is for larger supplies, greater domestic use and exports and higher ending stocks," the report said, adding that while the corn crop is projected to fall from the record-high estimate for this marketing year, a decline in area planted was partially offset by higher yield, initially forecast at 181 bu/acre.

"With higher beginning stocks, total corn supplies are forecast at 16.9 billion bu, the highest since 2017-2018," the report said.

The report made no change to the previous yield estimate for the current marketing year at 177.3 bu/acre.

Global corn inventory forecasts also were below industry expectations. The report put corn available globally at 313.08 million metric tons by the end of the 2023-2024 season, about 0.58% below pre-report forecasts. The debut of the 2024-2025 forecast at 312.27 million mt fell short of industry expectations by about 1.9%.

"World corn use is expected to rise less than 1% to a record 1.221 billion mt, with foreign consumption increasing modestly," USDA said in the report.

In the U.S., the agency clipped its estimate for the average farm price for corn by 5cts for a second straight month to $4.65/bu. That was down nearly 29% from the 2022-2023 season. The agency's initial farm price forecast for 2024-2024 projected a 25ct drop from this year to $4.40/bu.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

-- Reporting by Spencer Kelly, skelly@opisnet.com, Editing by Jeff Barber, jbarber@opisnet.com

(END) Dow Jones Newswires

05-10-24 1446ET