Growing ethanol capacity pushes corn use higher

The U.S. Department of Agriculture's World Agricultural Supply and Demand Estimates (WASDE), released earlier this week, projected U.S. feed grain production for 2010-11 is unchanged, but said that a smaller carry-in for corn, sorghum and barley is expected to reduce domestic feed grain supplies.

According to the WASDE report, corn for food, seed and industrial (FSI) use is projected 110 million bushels higher for 2010-11, mostly in line with higher projected corn use for ethanol, sweeteners and starch for 2009-10.

The higher use, combined with lower beginning stocks, drops projected 2010-11 corn ending stocks 245 million bushels to 1,573 million, which could increase average farm price for corn by 10 cents, along with other feed grains, the WASDE report said.


The report said that U.S. corn use for 2009-10 is projected 135 million bushels higher as increased FSI use more than offsets a reduction in expected feed and residual use.

Corn use for ethanol, the report said, is increased by 150 million bushels, reflecting the continued record pace of ethanol production and usage through March based on the latest data from the Energy Information Administration (EIA).

Higher ethanol production, the report said, is also supported by record production of gasoline blends with ethanol, as indicated by weekly data from EIA through May and forecasts for rising gasoline demand during the summer driving season.

According to Matt Hartwig of the Renewable Fuels Association, for the week ending June 4, the EIA is reporting ethanol production averaged 839,000 barrels per day (b/d), figuring out to more than 35 million gallons daily.

He said that EIA also noted that more that 768.6 million gallons of ethanol are in storage.

"By comparison, total finished gasoline demand (including conventional gasoline, reformulated gasoline or RFG, and imports) averaged more than 386 million gallons daily for the week," he said.

The WASDE report said corn use is increased by 5 million bushels each for starch and glucose/dextrose as the gradual economic recovery spurs production of these products. Feed and residual use was lowered 25 million bushels with increased availability of distillers grain, which is a byproduct of ethanol production.

The WASDE report said that U.S. corn ending stocks for 2009-10 are projected to be 135 million bushels lower. At 1,603 million bushels, this year's ending stocks would be down 70 million bushels from 2008-09, according to the report.

Other WASDE report items are:

-- Global coarse grain supplies for 2010-11 are projected to be 5.3 million tons lower, with the largest share of the decline resulting from lower expected corn carry-in in the United States.

-- Global coarse grain production for 2010-11 is lowered 1.4 million tons, as higher corn production is more than offset by reductions in barley, oats, rye and mixed grains, mostly reflecting reduced crop prospects in EU-27.

-- Global corn trade is raised for both 2009-10 and 2010-11. Higher corn trade for 2009-10 reflects increased imports by China and Vietnam and higher exports by Argentina.

-- Global corn consumption is raised 4 million tons for 2010-11, mostly reflecting higher use in the United States.

source: theindependent