WASDE reduces 2018/19 forecast for corn use in ethanol

By Erin Voegele | February 08, 2019

The USDA has reduced its 2018/2019 projection for corn use in ethanol production by 25 million bushels when compared to its December forecast in the latest edition of its World Agricultural Supply and Demand Estimates Report, released Feb. 8.

Within the February WASDE report, the USDA said the current 2018/19 U.S. corn outlook is for lower imports; production; food, seed and industrial (FSI) use, feed and residual use; and stocks. Corn production is estimated at 14.42 billion bushels, down 206 million bushels on reduction in yield to 176.4 bushels per acre. Harvested area is down fractionally, according to the report.

Total corn use is down 165 million bushels to 14.865 billion. FSI use is lowered 40 million bushels, reflecting reductions to corn used for ethanol and other industrial use.

The USDA currently predicts 5.575 billion bushels of corn will go to ethanol production in 2018/19, down from the forecast of 5.6 billion bushels made in December. The January WASDE report was not published due to the recent government shutdown. The reduction is based on the most recent data from the Grain Crushings and Co-Products Production report and weekly ethanol production data as reported by the U.S. Energy Information Administration for the months of December and January. In 2017/18, an estimated 5.605 billion bushels of corn went to ethanol production, up from 5.432 billion bushels in 2016-17.

Other RFI use is lowered 15 million bushels with lower projections for high fructose corn syrup and glucose and dextrose. Feed and residual use is lowered 125 million bushels to 5.375 million bushels based on a smaller crop and indicated disappearance during September-November, as reflected by the Dec. 1 stocks. With supply falling more than use, corn stocks are lowered 46 million bushels. The season average corn price received by producers is unchanged at a midpoint of $3.60 per bushel.

Foreign corn production is forecast higher with increases for Argentina, China, and Ukraine more than offsetting reductions for South Africa and Mexico. Argentina’s corn production is up based on higher expected area and yield, with abundant rainfall and benign temperatures over the past two months boosting yield prospects. China and Ukraine are higher based on the latest official statistics. South Africa is lowered as heat and dryness during the month of January, particularly in the western producing areas, reduces yield prospects.

Major global changes for 2018/19 include increased corn exports for Argentina and Ukraine, partially offset by reductions for South Africa and Mexico. For 2017/18, Argentina’s exports are reduced with a partially offsetting increase for Brazil based on observed shipments to date for the local marketing years that both started in March 2018. Imports are raised for South Africa for the marketing years that both started in May 2018. For 2018/19, imports are raised for Chile, but lowered for Venezuela. Foreign corn ending stocks are higher, mostly reflecting increases for Argentina and Chile. Global corn stocks, at 309.8 million bushels, are up 1 million bushels.