July 14, 2008

USDA lowers estimate for amount of corn used by ethanol industries

USDA lowered its estimates of corn usage by ethanol industries, as high corn prices drove ethanol producers to reduce output or delay the opening of new plants.

In its July supply and demand report released last Friday, the 2007-2008 ethanol usage is estimated at 2.95 billion bushels, a drop of 50 million from last month's estimates.

The revised estimates were due to "delays in plant startups and construction as well as lower expected plant capacity utilization," said the USDA in the report.

Corn usage forecast for 2008-2009 were also lowered 50 million bushels to 3.95 billion bushels.

Last month, leading US renewable fuel producer Verasun Energy Corporation (VSE) postponed the opening of three new ethanol plants, which is expected to increase the company's annual ethanol production by 450 million gallons. Currently, VSE has 14 plants that produce about 1.3 billion gallons of ethanol per year. It is also the largest producer with ethanol as its main product.