Ethanol production during the first five and a half weeks of the marketing year was about 1 percent larger than during the same period last year, suggesting that corn consumption for ethanol and by-products production is progressing at about the same pace as last year.

"Current ethanol production margins are large, and ethanol consumption is supported by favorable blending margins and strong exports. Ethanol production is expected to remain above the pace of a year ago through the first quarter of the marketing year.

“There is some uncertainty about production in 2012 as the blender's tax credit expires," he said.

Feed and residual use of corn remains under a cloud of uncertainty due to the extremely low level of consumption implied for the 2010-11 marketing year.

"The placement of broiler-type chicks was 8.3 percent below the level of a year ago for the two weeks ending Oct. 8. Cattle-on-feed numbers are expected to fall below the level of the previous year beginning in early 2012.

“The continuation of record high hog prices, however, should result in stable hog numbers for an extended period," he said.

The pace of feed consumption will not be revealed until the December Grain Stocks report is released in the second week of January.

The supply of U.S. soybeans for the 2011-12 marketing year is estimated at 3.25 billion bushels, 205 million smaller than last year's supply. Consumption will be limited to the 3.13 billion bushels projected by the USDA, 150 million bushels (4.7 percent) below the consumption of a year ago.

"Almost all of that reduction (125 million bushels) is expected to be in the export market, reflecting increased competition from South American soybeans. The domestic crush is expected to decline by 13 million bushels, or 0.8 percent," Good said.

The Census Bureau has discontinued the monthly report of soybean crush so estimates will be based on monthly reports from the National Oilseed Processors Association.

That report for September indicated an 11.7 percent year-over-year decline in the domestic crush. The pace will obviously have to accelerate in order to reach the USDA projection.

"The pace of U.S. soybean exports and export sales are running well below the torrid pace of a year ago. China bought and imported large quantities of U.S. soybeans early in the marketing year last year. Shipments plus outstanding sales are currently about 25 percent behind the level of a year ago, but the gap is expected to narrow over the next several weeks," he said.

Expectations about the strength of demand and the rate of corn and soybean consumption hinge on a combination of South American crop prospects and global economic conditions. Again, those factors will unfold over the next few months.

"After the wide swings of the last three months, a much narrower trading range is expected for both corn and soybeans prices into the winter months," Good added.