September 13, 2007

 

USDA raises corn production estimate; sees lower demand from ethanol units

 

 

The USDA again raised its forecast for US corn production, but also predicted weaker demand from the US ethanol industry, according to a USDA monthly supply and demand report released Wednesday (Sep 13).

 

The 2007-08 corn production forecast was raised to 13.31 billion bushels in the September report, up from the August forecast of 13.05 billion bushels and the July forecast of 12.84 billion bushels.

 

The latest forecast increase, USDA said, is due to stronger than expected average yields.

 

The forecast yield of 155.8 bushels per acre would be the second highest ever, but still 4.6 bushels per acre below the 2004 record, the USDA said in its report

 

Meanwhile, the USDA raised its estimates for both beginning and ending stocks for the 2007-08 marketing year. Beginning stocks are now forecast at 1.142 billion bushels, a 5-million-bushel increase. The new prediction for ending stocks is 1.675 billion bushels, 159 million more than the August forecast.

 

Corn used for ethanol consumption, a factor believed to have driven up prices immensely this year, would be lower than previously forecast, the USDA said.

 

Ethanol use is lowered based on indications of declining plant capacity utilization and a slower-than-expected pace of start-ups, the USDA said in its report.

 

The USDA lowered its "ethannol for fuel" forecast by 100 million bushels to the new prediction of 3.3 billion.

 

In May, the USDA increased its ethannol-usage forecast from 3.2 billion up to 3.4 billion bushels. The revised figure would still show a near-50 percent increase in corn consumption than the previous year. The US ethannol industry used an estimated 2.1 billion bushels of corn in the 2006-07 year.