October 17, 2006

 

Ethanol appears to impact US corn stock

 

 

Increasing ethanol production appears to be making a dent in the USDA's corn carryover estimate for the 2006/07 marketing year, the head of the Nebraska Corn Board said, according to the Grand Island Independent.

 

The US Agriculture Department said last week that corn production is forecast at 10.9 billion bushels. That's down 209 million bushels from last year's harvest.

 

Don Hutchens, Nebraska Corn Board executive director, said he thinks the rise of the ethanol industry led the USDA to drop its corn carryover estimate to 996 million bushels. Carryover stocks were about 2 billion bushels last year.

 

"Ethanol production has consumed an additional 550 million bushels in the last year, so that accounts for about half of the decrease in carryover," Hutchens told the newspaper in a story published Sunday (Oct 15). "There are dozens of ethanol plants under construction across the Corn Belt, and once they are operating, they will have to be fed each and every day."

 

Nationally, there are 101 ethanol biorefineries that have a capacity to produce more than 4.8 billion gallons annually. An additional 44 biorefineries are under construction and seven are expanding. That will add more than 3 billion gallons of capacity when the projects are complete.

 

The USDA estimated that the 2006/07 marketing year average price for corn raised 25 cents on both ends of the range, to $2.40 to $2.80 per bushel. The increase reflects the tighter balance sheet, higher-than-expected cash prices in recent weeks and strong futures prices.

 

Strong export demand has been another factor, Hutchens told the newspaper. He said corn exports have increased by 100 million bushels since the September supply-and-demand projections.

 

"I think our foreign customers have decided they better buy US corn while it is available and while it is still cheap," Hutchens said. "I don't think their consumption has changed much. It's just that they have decided to fill their bins with cheaper corn."

 

While ethanol and exports are gobbling up corn supplies, Hutchens said the livestock industry has expressed concern about tightening corn supplies.

 

Hutchens said there could be a 5 to 7 percent increase in corn acres next year, to more than 8 million acres, especially if the trend for higher corn prices continue, according to the newspaper.