WASDE: Corn use for ethanol expected to increase 1%

By Erin Voegele | May 10, 2019

The USDA has forecast that 5.5 billion bushels of corn will go to U.S. ethanol production during the 2019-’20 season in its latest World Agriculture Supply and Demand Estimates report, released May 10.

Within the report, the USDA said the U.S. corn crop is projected at 15 billion bushels for 2019-’20, up from last year and the second largest on record behind 2016-’17 as an increase in area more than offsets a reduction in yield.

The yield projection of 176 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather. With beginning stocks down from a year ago, total corn supplies are forecast record high at 17.2 billion bushels.

Total U.S. corn use in 2019-’20 is forecast to increase when compared to a year ago as greater domestic use offsets a slight decline in exports. Food, seed, and industrial use is projected to rise 50 million bushels to 7 billion.

The USDA said corn used for ethanol is projected to increase 1 percent from a year ago, based on expectations of modest growth in motor gasoline consumption, a slight decline in ethanol’s inclusion rate into gasoline, and larger exports.

Feed and residual use is projected higher on a larger crop, lower expected prices and continued growth in grain consuming animal units.

U.S. corn exports are forecast to decline 25 million bushels in 2019-’20, despite larger world corn trade. Increased exports out of Argentina and Brazil during 2018-’19 are expected to limit U.S. exports during the first half of 2019-’20. Combined corn exports for Ukraine and Russia in 2019-’20 are projected to decline, mostly reflecting a return to normal weather for Ukraine following a bumper harvest in 2018-’19.

With total U.S. corn supply rising more than use, USDA said 2019-’20 ending stocks are up 390 million bushels from last year, and if realized would be the highest since 1987-’88. Stocks relative to use at 16.9 percent would be the highest since 2005-’06. With larger stocks relative to use, the season-average farm price is projected at $3.30 per bushel, down 20 cents from 2018-’19 and the lowest since 2006-’07.

World corn production is forecast record high, with the largest increases for the U.S., South Africa, Russia, Canada, India, and Brazil. Partly offsetting are smaller crops projected for China and Ukraine. Global corn use is expected to growth 1 percent, while global corn imports are projected to increase 2 percent. Notable forecast increases in corn imports include China, Iran, Kenya, Mexico, Saudi Arabia, Turkey, and Vietnam. Global corn ending stocks are down 11.2 million tons from a year ago, mostly reflecting a forecast decline for China. Outside of China, stocks are up 6.8 million tons, and if realized, would be the highest since 2016-’17.