USDA’s World Agricultural Supply and Demand Estimate (WASDE) out this week left corn stocks unchanged but lowered the season average price estimate by 20 cents to $7.40 per bushel.

USDA maintained corn ending stocks in the U.S. for the marketing year at a tight 647 million bushels, which is about three weeks worth of supply. Globally, USDA slightly lowered the projection for corn ending stocks in the current marketing year to 117.6 million metric tons, which is down 13.4 million from last marketing year. However, global coarse grains production was actually increased 7.9 million metric tons, as China reported a corn crop four percent larger than the November estimate.

“The drought reduced production by four billion bushels from what we thought earlier this year,” said USDA Chief Economist Joe Glauber. “No question that’s rationed demand and we’ve seen a really tight stock situation.”

Glauber says margins for ethanol producers have been very tight this year. “If you look at ethanol production, it’s been below 13 billion gallons on an annualized basis, if you look at weekly production numbers, and that reflects the lower margins for sure,” he said. Corn use for ethanol is forecast at 4.5 billion bushels, 10% lower than last year.

According to the Renewable Fuels Association, the U.S. ethanol industry is projected to use 78.9 million metric tons of grain (net distillers grains) or less than three percent of the world grain supply – the lowest rate in five years. “Further, more grain will be available for non-ethanol use than any other time in history with the single exception of last year,” said RFA Vice President, Research and Analysis Geoff Cooper. “In fact, grain available for non-ethanol use in 2012/13 will be 15% higher than 10 years ago in 2003/04. Meanwhile global population grew 9.8% during this period.”