USDA’s August WASDE reduces forecast for corn use in ethanol

By Erin Voegele | August 12, 2019

The USDA reduced the volume of corn it expects to go to ethanol production by 25 million bushels in its latest World Agricultural Supply and Demand Estimates report, released Aug. 12.

The USDA’s current 2019-’20 corn outlook is for larger supplies, reduced exports and corn used for ethanol, and greater ending stocks.

Corn production is expected at 13.9 billion bushels, up 26 million bushels from the July projection as a decline in harvested area is virtually offset by an increase in yield. The season’s first survey-based corn yield forecast, at 169.5 bushels per acre, is 3.5 bushels higher than last month’s projection.

The USDA cites its latest Crop Production report as predicting Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio and South Dakota will have yields below a year ago. Of the major producing states, only Missouri is expected to have yields above last year’s.

The agency now expects 5.475 billion bushels of corn to go to ethanol production in 2019-’20, down 5.5 billion bushels predicted last month. USDA data shows approximately 5.425 billion bushels of corn went to ethanol production in 2018-’19 and 5.605 billion bushels in 2017-’18.

Exports are lowered reflecting U.S. export competitiveness and expectations of increasing competition from Argentina, Brazil and Ukraine. With supply rising and use falling, ending stocks are up 171 million bushels to 2.2 billion. The season-average corn price received by producers is lowered 10 cents to $3.60 per bushel.

Globally, corn export increases are expected for Ukraine and Serbia, with a partially-offsetting reduction in Russia. For 2018-’19, exports for Argentina and Brazil are raised for the local marketing year beginning March 2019, based on larger-than-expected shipments during the month of July. Corn imports for 2019-’20 are raised largely reflecting increases for the EU and Indonesia. For China, corn feed and residual use is lowered based on lower forecast protein meal consumption. Foreign corn ending stocks are higher relative to last month, mostly reflecting increases for China, EU, Ukraine, and Tukey partially offset by reduction for Argentina and Indonesia.