US corn ending stocks for 2008/09 are projected 316 million bushels higher this month on higher estimated production and lower expected use.

Corn production for 2008/09 is estimated 81 million bushels higher, surprising traders who expected a downward revision in production figures.

Corn feed and residual use is reduced 50 million bushels, reflecting lower animal numbers and September-November disappearance as indicated by December 1 stocks.

Ethanol corn use is lowered 100 million bushels as sustained negative ethanol production margins since early December have reduced incentives for ethanol output.

Ethanol usage has backed off nearly 400 million bushels over the past two months, according to Brian Basting, analyst for Advanced Trading.

Exports are projected 50 million bushels lower based on the slow pace of sales and shipments to date, with 30pc more feed wheat market on the market this year compared to last.

Soybean production is estimated at 2.959 billion bushels, up 39 million bushels from last month based on both higher yields and harvested area.

The soybean yield is estimated at 39.6 bushels per acre.

Soybean exports are raised 50 million bushels to 1.1 billion due to strong sales and shipments to China.

Projected soybean crush is reduced 30 million bushels to 1.685 billion bushels reflecting sharply reduced domestic soybean meal consumption.

Soybean ending stocks are projected at 225 million bushels, up 20 million.

Basting said lessons learned in 2008 should remind both producers and end users that volatility on the upside and downside has to be respected.

End users should lock in a ceiling using a call option and leaving the downside open.

The same price swing volatility isn't expected in 2009, but South America remains a bit of bullish fire for soybean prices.

Joe Victor, analyst for Allendale, said the increased corn ending stocks and lower usage may create less emphasis on buying corn acres battle acreage in 2009, as corn demand no longer exceeds production.