In Washington, the US Department of Agriculture dramatically lowered its corn harvest projection from 13.11 billion bushels to 12.664 billion bushels, which touched off a rally in ethanol prices to $2.184 per gallon on the CBOT for November deliveries (and reaching $2.31 in the New York cash market).

The report is likely to substantially rally corn prices in trading this week, after corn for December delivery jumped 30 cents to $5.28 per bushel, a rise that triggered exchange rules limiting one-session rises.

A consensus of analysts polled by Bloomberg had been projecting corn harvests of 12.97 billion bushels. Growth Energy CEO Tom Buis noted that farmers are still harvesting, indicating that the final crop yield could be higher than projected in today’s report. And while the forecast is leaner than anticipated by market watchers, Buis said that U.S. grain producers will still ultimately have a sizable surplus after all demand is met.

“Today’s report forecasting the third largest corn crop and yield on record show the productive capacity of America’s farmers. Even despite challenging weather conditions, we can produce enough grain to meet our food, feed, fuel, and export obligations – and still leave corn in surplus,” said Buis. “Actual demand for grain – for food, for livestock feed, for export and ultimately for renewable fuel – has hardly changed, showing this country can produce all the grain we need. We learned from the last time that Wall Street speculators ran up the price of grain – using commodity prices like poker chips. No one should be fooled.”

source: biofuelsdigest

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