The U.S. Department of Agriculture is expecting more corn to be made into ethanol and exported overseas this year, but less to be fed to livestock.

According to the May World Agricultural Supply and Demand Estimates released on Tuesday morning, total U.S. corn use for 2009/10 is projected to be three percent higher than the current year with higher expected food, seed, and industrial (FSI) use and exports more than offsetting a decline in projected feed and residual use.

Total usage in the FSI category use is projected seven percent higher with a 350-million-bushel rise in ethanol corn use accounting for most of the increase. The 4.1 billion bushel estimate for ethanol reflects the increase in the Renewable Fuels Standard, as well as improved blending incentives as higher gasoline prices increase demand for ethanol.

At the same time, exports are projected to increase by nine percent “as world corn trade and feeding are expected to recover
modestly in 2009/10, partly reflecting a reduction in global supplies of low-cost feed quality wheat.”

USDA is also forecasting that the amount of corn used to feed livestock will be down two percent this year due to reduced animal numbers and the increased availability of the ethanol by-product distiller’s grains used for animal feed.