May 15, 2006

 

USDA sees tight 2006/07 corn stocks, strong ethanol usage

 

 

The US Department of Agriculture said Friday (May 12) that US corn stocks will be tight for the 2006/07 marketing year with lower production and stronger demand from ethanol producers.

 

Corn ending stocks for 2006/07 will be just 1.141 billion bushels, the USDA said in its monthly supply and demand report, almost half of the latest 2.226 billion carryout forecast for 2005/06.

 

The USDA, in its first 2006/07 forecast, said total corn usage will rise 6 percent to "a record 11.6 billion bushels". That, the USDA said, is due in part to quickly rising demand by the ethanol industry.

 

But USDA also lowered its corn production forecast in 2006/07 to just 10.55 billion bushels, down from 11.112 billion bushels in 2005/06.

 

"Domestic use for ethanol production increases 34 percent from last year," USDA said. The new 2006/07 forecast for ethanol corn usage is 2.15 billion bushels, up from 1.6 billion bushels in 2005/06.

 

There are 97 ethanol refineries in the US that can produce about 4.5 billion gallons per year, according to the Renewable Fuels Association. Another 35 ethanol refineries are now under construction. The US depends mostly on corn for the ethanol it produces, while sugar cane is the main ingredient of ethanol produced by Brazil.

 

The USDA also predicted a 6 percent increase in corn exports, putting the 2006/07 forecast at 2.15 billion bushels, the same amount as the ethanol-usage prediction.

 

"The export increase is due to reduced foreign competition and lower global feed-quality wheat supplies," the USDA said.

 

The new 2006/07 USDA forecast for US corn exports of 2.15 billion bushels is an increase from the latest prediction for 2005/06 of 2.025 billion bushels--which is an increase from a month ago when the USDA predicted 1.95 billion bushels of corn for export.

 

Argentina is also predicted to boost corn exports in the 2006/07 marketing year. The South American country is expected to export 11.5 million tonnes of corn, up from 9 million tonnes in 2005/06.