Enough corn in U.S. for food and ethanol, for now

By Sam Nelson - Analysis

CHICAGO (Reuters) - U.S. government data on Friday showed there is sufficient corn for the United States to supply itself with food and ethanol through next year, but the outlook hinges on cuts in exports and less of the grain being used as feed.

It is also hugely dependent on good weather in America's corn country, always a risky bet.

"This morning's crop report is an ominous sign that we are entering dangerous and uncharted waters for food prices," said Scott Faber, vice president of federal affairs for the U.S. Grocery Manufacturers Association, a trade group.

Right now, wet and cold weather is threatening to slash corn plantings and trim yields at a time when every bushel is needed to meet the soaring demand for food and for fuel. And extremely hot weather at the wrong time this summer could further trim corn supplies.

"Any way you look at it, the government really had to stretch ... to keep you above pipeline minimums," said Don Roose, analyst and president of U.S. Commodities, Des Moines, Iowa.

USDA in its May supply/demand report released early on Friday estimated surplus corn stocks in the United States at the end of the new-crop marketing year (2008/09) at 763 million bushels, nearly half of this year's 1.383 billion-bushel supply yet still within what is considered a "comfortable" level.

The 2008/09 or new-crop marketing year will end on August 31, 2009.

The government's estimate for corn supplies next year is more than an average of analysts' estimates for 685 million and a lot more than some analysts were expecting such as Joe Victor of Illinois research and advisory firm Allendale Inc.