|Forecast corn use for ethanol. Click to enlarge.|
The December edition of the US Department of Agriculture’s (USDA) World Agricultural Supply and Demand Estimates (WASDE) drops the projected use of corn for ethanol production by 300 million bushels for 2008/09 to 3,700 million bushels from its November forecast of 4,000 million bushels. The lower consumption figure still represents a 22.3% increase over estimated corn use for ethanol in 2007/08.
Estimated corn consumption for ethanol production in 2007/08 was 3,026 million bushels, according to the USDA. Consumption for 2006/2007 was 2,119 million bushels.
The December WASDE keeps projected total corn production for 2008/09 at 12,020 million bushels, and maintains its estimate of total supply (including stocks and imports) at 13,659 million bushels. The revised forecast thus projects ethanol production taking 27.1% of the total corn supply, or 30.8% of new production.
Estimated production in 2007/08 was 13,074 million bushels, with 14,398 million bushels total supply; production in 2006/07 was 10,535 million bushels, with 12,514 million bushels total supply.
Corn use is projected lower with increased feed and residual use more than offset by reductions in ethanol use and exports. Ethanol use is projected 300 million bushels lower this month as prospects for blending above federally mandated levels decline. Financial problems for ethanol producers are reducing plant capacity utilization for existing plants and delaying plant openings for those facilities still under construction. Falling gasoline prices have also resulted in high relative prices for ethanol, reducing blender incentives.
Despite reductions in expected meat production, corn feed and residual use is raised 50 million bushels as lower ethanol production reduces the availability of distillers grains. Corn exports are projected 100 million bushels lower reflecting strong competition from larger foreign grain supplies and the slow pace of sales to date. Projected ending stocks are raised 350 million bushels. The season-average farm price is projected at $3.65 to $4.35 per bushel, down on both ends of the range from last month’s $4.00 to $4.80 per bushel.
Global coarse grain consumption is projected 7.4 million tons lower mostly on lower expected US ethanol corn use. Global coarse grain stocks for 2008/09 are projected at 165.5 million tons, up 14.6 million from last month, and the highest since 2004/05.—USDA WASDE
Although the projected number of planted and harvested acres in 2008/09 declines from 2007/08, the USDA projects an increase in average corn yield per acre from 151.1 bushels to 153.8 bushels.