WASDE predicts rebound in corn use for ethanol production

By Erin Voegele | May 12, 2020

The USDA is predicting 5.2 billion bushels of corn will go to ethanol production during the 2020-’21 crop year, up 250 million bushels when compared to the estimated volume of corn that went to ethanol production during the 2019-’20 crop year, according to the agency’s May 12 World Agricultural Supply and Demand Estimates report.

According to the WASDE report, the U.S. feed-grain outlook for 2020-’21 is for record high production and domestic use, greater exports and larger ending stocks. The corn crop is projected to reach a record 16 billion bushels, up from last year on increased area and return to trend yield. The yield production of 178.5 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather, estimated using the 1988-2019 time period. Despite beginning stocks that are down slightly from a year ago, the USDA said total corn supplies are forecast record high at 18.1 billion bushels.

Total U.S. corn use is in 2020-’21 is forecast to rise relative to a year ago with increases for domestic use and exports. Food, seed, and industrial (FSI) use is expected to increase 245 million bushels to 6.6 billion. Corn used for ethanol is projected to increase from the 2019-’20  COVID-19 reduced levels based on expectations of a rebound in U.S. motor gasoline consumption.

The USDA now predicts corn use for ethanol will reach 5.2 billion bushels during the 2020-’21 crop year, up from an estimated 4.95 billion bushels during the 2019-’20 crop year, but down from 5.378 billion bushels during the 2018-’19 crop year.

Corn feed and residual use is projected higher, mostly reflecting a larger crop and lower expected prices.

U.S. 2020-’21 corn exports are forecast to rise 375 million bushels to 2.15 billion bushels, driven by growth in world corn trade. U.S. market share is expected to increase from the 2019-’20 multi-year low, but remains below the average level seen during 2015-’16 to 2019-’20 with expected competition from Argentina, Brazil and Ukraine.

With total U.S. corn supply rising more than use, 2020-’21 U.S. ending stocks are up 1.2 billion bushels from last year and if realized would be the highest since 1987-’88. Stocks relative to use at 22.4 percent would be the highest since 1992-’93. With larger stocks relative to use, the season-average farm price is projected at $3.20 per bushel, down 40 cents from 2019-’20 and the lowest since 2006-’07.

World corn production is forecast record-high, with the largest increases in the U.S., Brazil, Ukraine, Mexico and Canada. Global corn use is expected to grow 4 percent, with foreign consumption up 3 percent. Global corn imports are projected to increase 4 percent. Notable forecast increases in corn imports include the EU, Egypt, Mexico, Iran, Morocco and Vietnam. Global corn ending stocks are up from a year ago, as a decline in foreign stocks is more than offset by an increase for the U.S. Excluding China and the U.S., ending stocks are up 4 percent relative a year ago.