September 13, 2007

US '09 corn-based ethanol may reach 20.43 billion gallons 

The US' ethanol production capacity will probably total 20.43 billion gallons as of August 2009, up sharply from 6.707 billion gallons as of August this year on high profit forecasts and government support, a US commodity risk management consultancy firm said Wednesday.

That means corn consumption for ethanol will total 7.46 billion bushels in the 2009/10 crop year, more than double the 3.62 billion bushels in 2007/08, Bill Tierney, executive vice president of research and marketing for John Stewart & Associates, said during the International Corn Industry Conference in Dalian, China.

But factors including changes in government policies, crude oil prices and the global economy may result in overcapacity, he added.

US corn acreage will likely fall by 3 million acres to 90 million acres in 2008, due to a shift to soybean planting, while soybean acreage may increase by 1 million to 2 million acres, Tierney said, without providing an actual forecast.

He said US investors have been and will continue to push up soybean prices to encourage farmers, especially those in Brazil, to grow more soybeans.

As a result, November 2007 soybean contracts traded on the Chicago Board of Trade will likely reach US$11.25 per bushel by mid-November, he said, compared with around US$9.20/bushel now.

"Two to three years of sustainable high corn and soybean prices are needed to encourage (more soybean acreage)," he said.