During March, the first month of the last half of the marketing year, ethanol production was 6 percent larger than in March 2010. Current ethanol blending margins and ethanol production margins point to a continued high rate of ethanol production.

Corn exports during March were about 10 million bushels less than exports a year earlier, but new export sales during March were 70 million bushels larger than in March 2010.

"The number of cattle in feed lots on March 1 was 5 percent larger than inventories of a year ago. The number of milk cows on farms in February was 1 percent larger than a year earlier, and the March 1 inventory of market hogs was 1 percent larger than the inventory of a year earlier. A slowdown in feed use does not appear imminent," he said.

Although the rate of corn use does not appear to be slowing, a slowdown is required. The upcoming wheat harvest may provide an opportunity for livestock producers to substitute more wheat for corn in the livestock ration. The degree of substitution will depend on the size and quality of the 2011 wheat harvest and the resulting relative prices of corn and wheat.

"Currently, corn and wheat prices in southern Illinois are about equal, but new-crop wheat prices are about 15 cents higher. Importers may also look to the newly harvested South American corn crop for a larger share of imports over the next five months," he said.

According to Good, corn prices have increased about 90 cents per bushel since the release of the March 1 corn stocks estimate. Prices are at the highest level of the year, and spot cash prices have exceeded the previous high reached in June 2008. Further price increases may be forthcoming unless there is some evidence that the rate of consumption has slowed, he said.