January 11, 2007

US ethanol would need 1 billion more bushels of corn for 2007

The booming US ethanol industry will require 1 billion more bushels of corn for fuel production this year than it did from the 2006 crop, USDA Chief Economist Keith Collins said Wednesday (Jan 10).

"Looking ahead to the 2007 crop of corn," Collins told the Senate Agriculture Committee, "it is quite likely, based on current ethanol plant construction, that corn used in ethanol production will rise by more than 1 billion bushels from the 2.15 billion bushels of the 2006 corn crop expected to be used for ethanol."

Simply drawing further down on stocks will not be sufficient, Collins said. Farmers will need to plant more corn.

"Use of 1 billion bushels, at a trend yield of 152 bushels per acre, would require an additional 6.5 million acres of corn, if corn consumed in other uses remains unchanged from this year's projected levels," he said. "With corn stock levels already being reduced this year, another large drawdown in stocks for the (2007-08 corn marketing year) will not be available to meet the rising demand, thus the higher corn prices that are signaling more planting."

Chicago Board of Trade March corn settled 5 3/4 cents higher to US$3.60 1/4 per bushel on Wednesday.

The latest USDA supply and demand report forecast shows 2006-07 marketing year ending stocks at 935 million bushels, a drop from 1.97 billion in 2005-06.

"How low can you go?" Collins said Wednesday. "You can't knock off another billion."