According to Good, the seasonal pattern and the total implied feed and residual use of corn during the 2010-11 marketing year is still troublesome. Explanations for the low level of use center on the potential for overestimating the amount of corn used to produce ethanol, increased feeding of distiller's grains, and/or an underestimation of the size of the 2010 crop.

"None of those explanations, however, addresses the inconsistent seasonal pattern of implied use. In addition, the implied sharp decline in feed and residual use of corn, all grains, and all feeds (including an estimate of distiller's grain) per animal unit during the last half of the marketing year is without explanation," he added.

With year-ending stocks of U.S. corn still expected to be a relatively low 6.7 percent of projected use, a lot of price uncertainty remains, he said.

"The immediate focus may be on the size of the South American corn crop and the implications for U.S. corn exports. The USDA lowered the projected size of the Argentine crop from 1.14 to 1.02 billion bushels in last week's report. Recent and upcoming precipitation will help stabilize that crop, but the extent of damage may exceed that reflected in the current forecast.”

The forecast of the Brazilian crop was unchanged at 2.4 billion bushels. The USDA now expects U.S. corn exports to reach 1.65 billion bushels during the current marketing year, he said.

"Nineteen weeks into the year, export inspections have averaged 32.7 million bushels per week (adjusted for Census export estimates through November).

“Inspections need to average 30.9 million per week from now through August in order for the total to reach the projection," he said.

A further reduction in the size of the South American crop, as occurred in the drought of 2008-09, could boost U.S. exports above the current projection, particularly if China continues the current pattern of small weekly purchases.

"Beyond the South American crop, corn prices will be influenced by 2012 U.S production prospects. In general, analysts are anticipating more acres, higher yields, and a much larger crop than in 2011," Good said.

According to Good, such a large crop has not yet been priced into the market. Potential crop size will be gradually reflected from spring through harvest, beginning with the USDA's February baseline projections and including the March 30 Prospective Plantings report.

"Oh, and don't forget the March Grain Stocks report to be released on the same day," he said.