(Updates with prices, adds analyst comment)
By Mark Weinraub
WASHINGTON, March 8 (Reuters) - U.S. corn supplies will be smaller than expected due to strong export demand and rising ethanol production while the already ample soybean stockpile was forecast to rise, the U.S. Agriculture Department said on Thursday.
U.S. soybean exports face increased competition from Brazil, the top world supplier. The government raised its outlook for Brazil soybean production by 1 million tonnes and its export outlook for the country by 1.5 million tonnes.
But it lowered its outlook for the Argentine soybean crop by 7 million tonnes. It also trimmed the Argentine corn harvest forecast by 3 million tonnes as hot and dry weather has cut yield potential in key growing areas of the country.
“With those Argentinian corn numbers coming down, it will mean that the U.S. is well positioned to pick up some more business globally,” said Ted Seifried, chief ag market strategist for Zaner Group.
The USDA also boosted its outlook for wheat ending stocks as U.S. supplies were priced too high to compete in the export market.
Chicago Board of Trade corn futures, which had been trading close to unchanged for much of the session, rose to their highest since July 25. Wheat and soybeans weakened.
In its monthly supply and demand report, USDA pegged corn ending stocks at 2.127 billion bushels, down from 2.352 billion last month and below the low end of market forecasts given in a Reuters poll.
USDA raised its U.S. corn export forecast for the 2017/18 marketing year by 175 million bushels to 2.225 billion bushels. It also raised its estimate of corn used for ethanol to 5.575 billion bushels from 5.525 billion bushels.
Domestic soybean ending stocks were seen at 555 million bushels, up 25 million bushels from the February forecast. The average of analysts’ estimates in a Reuters poll was 530 million bushels.
USDA lowered its U.S. soybean export view to 2.065 billion bushels from 2.100 billion bushels. But it raised its crush estimate by 10 million bushels to 1.960 billion bushels.
U.S. wheat ending stocks were seen at 1.034 billion bushels, up from 1.009 billion bushels in February. USDA lowered the wheat export outlook to 925 million bushels from 950 million bushels.
In Argentina, the corn crop was seen at 36 million tonnes and the soybean crop at 47 million tonnes. Brazil’s soybean harvest was seen at 113 million tonnes and its corn harvest at 94.5 million tonnes.
Additional reporting by Michael Hirtzer in Chicago Editing by Andrea Ricci and James Dalgleish