Analyst Sees 2010 Ethanol Demand Increase

Demand for ethanol in 2010 is expected to rise, according to Heather Jones, an equity analyst with BB&T Capital Markets.

The ethanol market now is balanced between supply and demand, however,analyst expects EPA to increase the blend limit in summer 2010.They thought there was untapped capacity in the industry that could ramp up quickly if demand grew, which could destabilize prices if supply once again outstripped demand.

Ethanol producers are coming off of two years of financial pain, though, and that experience is likely to keep overly rapid growth in check. Meanwhile, concerns over the total size of the 2010 corn harvest are overstated.

"In total, the year has put many stresses on potential production, yet the U.S. is still expected to harvest one of the largest corn crops in its history,".

With 8 percent of the corn still in the ground (as of Dec. 13), some 50 million to 80 million bushels of corn could be lost. And yet the price for this key feedstuff should remain in the $4 to $5 range, depending how many acres nationwide are added or subtracted from the total devoted to corn in 2010 compared with 2009.

source: porkmag