U.S. corn stockpiles are expected to shrink next year amid record use by ethanol distillers and stronger demand from China, keeping prices for the grain historically high, according to a government report.

Corn supplies at the end of the 2011-12 marketing year in August 2012 are projected at 870 million bushels, the U.S. Department of Agriculture said in its monthly Supply and Demand report July 12.

The USDA’s 2011-12 ending stockpiles estimate is up 25 percent from the agency’s previous forecast for 695 million bushels, but fell far short of traders’ and analysts’ expectations. Analysts expected stockpiles of about 1.013 billion bushels, based on newswire surveys.

Additionally, 2011-12 ending corn stocks are expected to decline from this year, according to the USDA. Supplies at the close of the 2010-11 marketing year are pegged at 880 million bushels, the USDA said, up 21 percent from a previous estimate.

Overall, the USDA numbers indicated corn supplies will remain relatively tight through most of next year, resulting in elevated prices for livestock feeders and other major buyers. Projected 2011-12 ending supplies, at 870 million bushels, would be the fifth-lowest in the past 16 years. Stockpiles as a percentage of use, at 6.4 percent, also is at historically low levels.

The USDA report probably will push corn futures in Chicago higher once trading opens July 12. AgTraderTalk LLC expects corn futures to rise 5 cents to 7 cents a bushel at the open, according to a report.

In overnight electronic trading, December corn futures fell 12 ¼ cents to $6.20 ½ a bushel.