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Ethanol Demand Driving Expansion of US Corn Crop; USDA Projects 31% of US Corn for Ethanol in 2016
16 February 2007
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| Projected production and use of corn in the US. Click to enlarge. Source: USDA. |
Demand for ethanol will push US corn output to more than 14 billion bushels by 2016, 4.3 billion (30.7%) of which will be used to produce approximately 12 billion gallons of corn-based ethanol, according to the US Department of Agriculture. In 2006, US farmers produced 10.5 billion bushels of corn, 2.15 billion (20.5%) of which went toward ethanol.
In the Agricultural Projections to 2016, the USDA noted that the strong expansion of corn-based ethanol production affects virtually every aspect of the field crops sector, ranging from domestic demand and exports to prices and the allocation of acreage among crops.
The USDA expects overall plantings expand and a higher portion of the total planted to corn. Higher feed costs and the increased availability of distillers grains as a byproduct of ethanol production also affect the livestock sector.
Corn acreage rises sharply in the USDA projections, climbing to 90 million acres by 2010 from 78.6 million acres in 2006 as rapid expansion in ethanol production increases corn demand, prices, and producer returns. As growth in ethanol use stabilizes, the USDA sees annual increases in corn production from yield gains outpacing increases in corn use for ethanol, allowing corn stocks to grow modestly and corn prices to ease somewhat.
Corn-crop expansion will likely lead to fewer soybeans, according to the USDA. In 2006, US soybean farmers produced 3.188 billion bushels. USDA expects that to bottom out at 2.88 billion bushels in 2009.
On the biodiesel front, USDA expects production capacity and output to rise rapidly again in 2007/08. Slower growth is then projected for several years, with biodiesel output leveling off beyond 2010/11 as higher soybean oil prices reduce profitability. At a projected high of 700 million gallons, biodiesel uses about 23% percent of soybean oil production, but accounts for less than 2% of highway diesel fuel use in the United States.
And despite the projected growth in production, even by the end of the projection period, ethanol production (by volume) represents less than 8% of annual gasoline use in the United States. The forecast assumes that cellulosic-based production of renewable fuels will meet the minimum specified in the Energy Policy Act of 2005 of 250 million gallons in 2013 and subsequent years. That does not factor in President Bush’s new call for a more aggressive 35 billion gallon renewable fuel standard by 2017. (Earlier post.)
In testimony before the US Senate Committee on Agriculture, Nutrition and Forestry last week, Ag Secretary Mike Johanns stressed that while corn will have an on-going role in the ethanol industry, cellulosic ethanol is the key to meeting production goals.
We are providing $1.6 billion in new funding in our proposal for renewable energy research development and production targeted at cellulosic ethanol. I am confident in telling you, I think corn will always be a part of our ethanol industry. It’s got a tremendous footing in the market. It’s been around a long time, really successful in the last couple of years. But if we are to meet our goals, if we are to meet that goal that the President talked in his State of the Union of reducing gasoline consumption by 20 percent in ten years, we need to move towards cellulosic.
But here’s the positive thing about that. All of a sudden, ethanol goes from a corn-belt-based program to a national program. If you have biomass in your state, you have forest ground where literally you want to clean up what’s laying on the floor of that forest, you could have a biomass program.
—Sec. Johanns
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February 16, 2007 in Ethanol | Permalink | Comments (30) | TrackBack (0)
Comments
Posted by: kermit | February 17, 2007 at 05:56 AM
I will tell you that anyone who believes that in 20 years automobiles will still be burning a combustable fuel is nuts. Once a practical battery is established,
that'll be it. Perhaps this guy should have asked Rick Wagoner of GM - he and Bob Lutz as well, clearly stated that the future of automobiles is electric. No one in their right mind would spend the money required for either type of ethanol to fuel their vehicle. Ethanol is simply not competitive with electricity as a auto
power source.
Posted by: kent beuchert | February 17, 2007 at 11:58 AM
Biofuel ev and h2 isnt about making all the fuel everyone needs. Its about making all the fuel the wealthy want. Thats alot easyer.
In the end we will make whatever we make and some will just si and pout.
Posted by: wintermane | February 17, 2007 at 12:30 PM
Patrick:
USDA actually extrapolate in future current trend in corn yield per acre. It is quite substantial factor. But anyway, they predict that in 10 years ethanol share in gasoline market will level off at 8% by volume, which is 6.3% by energy content. That’s it. Your calculations confirm it. But do not forget, it is about how much oil US import from Saudi Arabia…
Posted by: Andrey | February 19, 2007 at 12:31 AM
I agree that:
(1) We need to make better use of energy personally.
(2) We need to begin developing alternative technologies now (both to be prepared and to create American profits in these new business opportunities).
(3) No single alternative energy source will be "the one" solution.
Becoming a vegetarian is an excellent way to reduce your personal energy consumption. I read recently that becoming a vegetarian may save as much energy as switching to a gas/electric hybrid as your primary vehicle.
The number one use of corn in America is animal feed. Billions of livestock animals consume billions of gallons of water and create billions of gallons of waste. That waste must then be treated.
It's a simple fact: raising livestock for food is highly energy intensive. The public is insulated from this reality by massive subsidies.
Cutting down on the number of animals consumed as food would yield a corresponding reduction in the energy consumed by the livestock industry.
The medical evidence is overwhelming -- reducing consumption of animal products (namely saturated fat) is good for your health.
Perhaps, in the distant future, American vegetarians will pay less for medical insurance.
Posted by: John - A Vegetarian | July 19, 2007 at 12:15 PM
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No corn and soybeans won't be able to provide our energy needs by themselves. Neither of them are the most efficient crops for ethanol and biodiesel respectively. Sugar cane or sugar beets are more efficient crops for ethanol and canola produces a lot more biodiesel per acre. The replacement of say 10 percent of our present fuel needs with ethanol or biobutanol and another 10% with biodiesel, and a 20% increase in fuel efficiency can begin to make a difference. With biodiesel you usually have a more efficient energyin versus energy out ratio. A promissing new energy source that I have been reading about is biodiesel produced from algae, up to 10,000 gallons an acre. In addition the algae can be used to clean coal power plant emissions or wastwater from sewage plants. As far as electric or plugin hybrid vehicles the cost of wind power is dropping, check out a company called MaGenn Power for a promissing new turbine. A company called Nanosolar has developed a thinfilm photovoltic system that may cut the cost of solar to $0.50 a watt. That would translate into supplying the typical electric needs of a house for about a $2000.00 dollar investment. To rehash a phrase from the 80's "just do something".