For corn, the USDA's weekly export inspections report reveals exports of 394 million bushels during the second quarter of the marketing year. Adjusting for Census Bureau export estimates in December, quarterly exports were likely near 420 million bushels, he says.

"Weekly estimates of ethanol production suggest that corn use for ethanol production during the second quarter of the marketing year was 11.5% larger than use of a year earlier, pointing to a use of 1.25 billion bushels," he says.

The use of corn for other food and industrial purposes during the quarter was likely near 350 million bushels, bringing total food and industrial use near 1.6 billion bushels, Good notes.

For the year, the USDA projects feed and residual use of corn at 5.2 billion bushels, 60 million bushels more than used last year. Use during the first quarter was calculated to be 72 million bushels larger than use during the same quarter last year, he says.

"If the USDA projection for the year is correct, use during the last three quarters of the year will be near the use of last year. Second-quarter use last year was estimated at 1.354 billion bushels. Use near that level this year would mean that 65.6% of marketing year feed and residual use of corn occurred in the first half of the year. That would be a very typical distribution prior to the anomalies in 2008-2009 and 2009-2010," says Good.

Total use of corn during the second quarter of the marketing year of 3.374 billion bushels would point to a March 1 inventory of 6.634 billion bushels, 1.06 billion smaller than the inventory of a year earlier, he adds.

"There appears to be considerable uncertainty about the likely level of March 1 corn stocks. The surprisingly large Sept. 1, 2010 stocks estimate for corn continues to raise questions about the counting of old-crop and new-crop stocks on Sept. 1 and the implication for feed and residual use during the last quarter of the 2009 marketing year and the first quarter of the 2010 marketing year," Good says.

In retrospect, however, it was really the June 1, 2010 stocks estimate that was the outlier, he notes.

The Sept. 1, 2010 stocks estimate now appears to be reasonable and logical and probably should not influence the expectation for the March 1 estimate of stocks, he says.

"Some have also pointed to the ease of sourcing corn from producers at a relatively weak basis as evidence that corn stocks are more abundant than expected. However, stocks should not be tight in the middle of the marketing year, and producers may be reacting to price level more than the magnitude of the basis," Good says.

Although basis levels are not especially strong, the carry in the futures market from March to July is much smaller than in the previous three years. A small carry discourages storage, he adds.