The university's Food and Agricultural Policy Research Institute, or FAPRI, forecast corn stocks at the end of the 2011/12 marketing year of 1.247 billion bushels, 44 percent above the 865 million bushels forecast by the U.S. Agriculture Department, which assumed the subsidy will continue.
The ethanol subsidy will be a matter of intense political debate for Congress in 2011 as it looks for ways to cut government spending.
One congressional watchdog has said ending the tax credit would save as much as $5.7 billion per year.
But a separate law mandates 12.6 billion gallons of ethanol production – a mandate unlikely to change.
The USDA has forecast a record 5 billion bushels of corn will be used to make ethanol in the marketing year opening on Sept 1, but FAPRI forecast a dip in demand from ethanol makers to 4.635 billion bushels, down from its estimate of 4.902 billion bushels in the current year.
FAPRI forecast a 2011 corn crop of 13.63 billion bushels from 91 million acres of plantings, slightly less than the 13.73 billion bushels from 92 mln acres forecast by the USDA last month.
The university think-tank also forecast corn ending stocks for the current marketing year of 745 million bushels, above the USDA's most recent forecast of 675 million bushels.
For soybeans, FAPRI forecast a crop of 3.35 billion bushels, very close to USDA's forecast of 3.345 billion bushels.
Strong world demand for crops likely will keep farm income high, pushing farmers to double-crop more acres and cut land planted to hay, the FAPRI report said.
FAPRI said total plantings for the 13 largest crops could reach 258.17 million acres, up 8 million acres, and approaching land use seen in 2008.
Wheat production was forecast at 2.22 billion bushels, 7 percent above USDA's forecast of 2.08 billion bushels.
