Livestock farmers' switch to using distillers' grains in place of traditional feed sources is behind the puzzle over unexpectedly strong US corn inventories which have depressed prices, Societe Generale said.
The declining levels of feed use of corn, without much of a balancing uptick in demand for other grains including wheat, and evident in inventory data, have continued to puzzle analysts.
Darrel Good, at the University of Illinois, has termed estimates "troublesome", while Darren Dohme at Illinois-based Powerline Group, has long accused the USDA of a "lack of logic" in its data.
However, the phenomenon looks like it can be explained after all by substitution of the likes of, in particular, corn with so-called distillers' grains with solubles, or DDGS, produced by biofuel plants as a byproduct of making bioethanol, SocGen analyst Michael Haigh said.
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