WASDE: Corn ethanol use projected to increase

By Susanne Retka Schill | April 08, 2008
Web exclusive posted May 9, 2008 at 6:51 p.m. CST

The USDA is projecting that ethanol use for the upcoming crop year will be up 33 percent from last year, projected at 4 billion bushels in the May 9 USDA World Agricultural Supply and Demand Estimates report. The slowing pace of plant construction and expansion, as well as lower capacity utilization, are expected to modestly dampen growth in ethanol corn use.

Overall, the 2008-09 U.S. feed grains outlook is for lower production, strong domestic demand, and lower ending stocks. The 2008-09 corn crop is projected at 12.1 billion bushels, down 7 percent from the record 2007-'08 crop based on the producer intensions reported in last month's Prospective Plantings Report. Corn yield is projected at 153.9 bushels per acre, 1 bushel per acre below the 1990-2007 trend based on the slower-than-average pace of planting this spring. The projected yield assumes a mid-May planting progress near the 10-year average and reflective of last year's May planting pace.

Corn supplies are project to fall 870 million bushels from the 2007-08 record with a small increase in carryin more than offset by the projected 949-million-bushel reduction in output. Higher year-to-year beginning stocks reflect this month's 100-million-bushel reduction in 2007-'08 corn use for ethanol.

Total U.S. corn use in 2008-09 is projected down 2 percent as reductions in feed and residual use and exports more than offset a continued expansion in ethanol production. Feed and residual use is projected down 14 percent as corn feeding declined with increased production of distillers grains, higher corn prices, and reduced red meat production.

Corn exports are projected down 16 percent as U.S. supplies face increased world competition with increased foreign production and a sharp drop in EU-27 imports. With total corn use expected to exceed production by 635 million bushels, ending stocks are projected down 45 percent. At 763 million bushels, ending stocks would be the lowest since 1995-96. The season-average price is projected at $5 to $6 per bushel, well above the current year's forecast record of $4.10 to $4.40 per bushel.