The USDA's quarterly Hogs and Pigs report to be released on March 25 will provide another indication of potential domestic feed demand. In December, hog producers indicated they would reduce sow farrowings by only 1 percent in the winter quarter and that year-over-year reductions in the spring of 2011 would be about 2 percent.

"Farrowings at those levels would point to pig crops near the levels of the previous year. The sharp increase in hog prices since December suggests that sow farrowings will be at least as large as indicated in December, even though feed prices have also increased. High milk prices are also likely, preventing any liquidation of milk cow numbers," he said.

Ethanol production remains at relatively high levels. Production during the first two weeks of March was running about 5 percent above the average rate in March 2010. This is above the 3 percent increase from now through August that is thought to be required to use the 4.95 billion bushels of corn projected by the USDA.

"There have been some legislative attempts to immediately discontinue the 45 cent per gallon blender's tax credit that is set to expire at the end of 2011. Such proposals are not expected to be successful. With a continuation of high crude oil prices and a large premium of gasoline prices relative to ethanol prices, demand for ethanol would remain strong even without the tax credit. Longer-term demand, however, would be more uncertain," Good said.

Prices for the 2011 corn crop have recovered most of the 60 cent decline that occurred between March 10 and March 16. Old crop prices have also recovered from the sharp decline, but remain about 50 cents below the high reached on March 4. The March 1 Grain Stocks report to be released on March 31 will provide an opportunity to re-evaluate the tightness of old crop inventories, he added.