From Green Right Now Reports

A decline in planting and an increase in demand have led to a predictable conclusion from the U.S. Department of Agriculture: Exporters, livestock feeders and ethanol makers are exhausting the corn stockpile faster than farmers can produce supply. Despite record crops in each of the past three years and potential for a third this year, the USDA expects corn carryover to shrink to the lowest level since 2006-07.

U.S. corn is mainly grown to feed livestock. (Photo: Green Right Now)

The USDA estimates that 1.478 billion bushels of corn will be in U.S. bins on August 31, when this marketing year ends, and 1.373 billion bushels will be on hand at the end of 2010/11. Those figures are sharply lower from previous estimates — down 8 percent for this year and down 12 percent for next year.

The report was not unexpected after the USDA last week surprised the market with data that showed corn plantings were smaller than expected this year and corn consumption through June 1 was far larger than expected. That revelation pushed U.S. corn futures up 16 percent to a two-month high, but prices remained well below 2010′s peak of $4.25 a bushel in early January.

In its update, USDA raised its estimate of corn consumed as livestock feed by 175 million bushels, to 5.525 billion bushels, but trimmed 50 million bushels from corn-for-ethanol due to a wobble in ethanol output.

The vast majority of corn grown in the U.S. — about 80 percent — is consumed by domestic and overseas livestock, poultry and fish production. Corn is fed in the form of grain, silage and corn oil to animals.

About 12 percent of U.S. corn ends up in foods that are directly consumed by people, such as corn chips and high fructose corn syrup, according to the National Corn Growers Association.

The remaining corn is used in industrial purposes, such as producing ethanol.