WASDE: Record yields meet increased demand from ethanol

By Kris Bevill | August 10, 2009
Report posted Sept. 11, 2009, at 9:56 a.m. CST

The USDA lowered its expectation for beginning corn stocks by 25 million bushels due to higher expected corn use for ethanol in 2008-'09, according to its Sept. 11 World Agricultural Supply and Demand Estimate. The U.S. DOE Energy Information Agency reported record blending of ethanol into gasoline in July and August and the trend is expected to continue. The USDA now expects over 4 billion bushels of corn to be used in 2009-'10 for ethanol production.

However, according to the WASDE report, corn farmers will harvest record yields of corn this year and will produce a total of 13 billion bushels of corn by the end of the season. Average yields are expected to be 161.9 bushels per acre for the 2009-'10 season compared to 153.9 bushels per acre in 2008-'09. Renewable Fuels Association President Bob Dinneen said the yield growth will provide any additional feedstock required by the ethanol industry in 2009-'10, demonstrating that increased demand for corn from ethanol expansion can be met solely through yield gains.

"It is time we put to bed the flawed notion that increased biofuel production results in vastly expanded cropland," he said. "With record yields on fewer acres, American farmers have demonstrated beyond refute that they are more than capable of providing the raw materials for ample food, feed and fuel. Such abundance and productivity would be catastrophic to farmers if new sources of demand did not exist. The role of ethanol in providing a value-added opportunity for farmers has been vital, and exists without requiring new cropland."

Projected corn use will equal the production amount for 2009-'10, which is also a new record. The use projections were increased by 150 million bushels from last month's report due to expected increases for exports from Canada and South America. Ending 2009-'10 corn stocks are projected at just over 1.6 billion bushels, 14 million bushels higher than last month, which has resulted lower projected corn prices. The average expected per bushel farm price for corn was lowered by up to 25 cents from August. and are now projected to be between $3.05 per bushel and $3.65 per bushel. By comparison, the average price paid per bushel of corn in 2007-'08 was $4.20.