Ethanol industry points to near-record corn yield, crop

By Susanne Retka Schill | January 12, 2011

In response to the USDA’s supply and demand report released Jan. 12, and the hot corn market with futures over $6 per bushel, ethanol industry spokesmen point out the 2010 crop is still the third largest U.S. corn crop in history, and, although the average crop yield was lowered to 152.8 bushels per acre, it still is the fourth highest in history.

The Renewable Fuels Association noted that USDA increased its demand forecast for ethanol to 4.9 billion bushels for the marketing year (Sept. 1, 2010 to Aug. 31, 2011) which translates to ethanol production of about 13.5 billion gallons. Recognizing the contribution of distillers grains and other feed coproducts of ethanol production, USDA lowered its livestock feed usage by 100 million bushels. USDA also lowered its projected ending stocks of corn to 745 million bushels.

“While not as large as originally thought, the 2010 corn crop is quite robust considering the challenges much of the Corn Belt endured,” the RFA commented. Growth Energy echoed the RFA’s comments. “Today’s report, while smaller than expected, is still the third largest corn crop on record and proves once again the tremendous capability of American farmers to meet our growing demand for food, feed and renewable fuel – even during challenging growing conditions,” said Tom Buis, Growth Energy CEO. “There is plenty of potential to produce more, both here and worldwide. American farmers have shown time and time again their ability to meet the demands of the marketplace.”

The USDA estimates for ethanol production in the current marketing fall in line with industry expectation. “It is unlikely that USDA will revise that number any higher in the near term given the constraints of the E10 blend wall and the anticipated slow adoption of E15 ethanol blends,” the RFA said.

“This report will undoubtedly be like catnip for speculators that will predictably seek to drive commodity markets higher,” the RFA statement continued. “This scenario has played out before, most recently in 2007-’08 when all commodities, led by crude oil, soared to unjustified and unsustainable levels. Moreover, enthusiastic Malthusians and other doomsday prognosticators will use this report to blame biofuels for food insecurities that have existed for decades.”

Pointing out supplies of food grains such as rice and wheat remain strong globally, the RFA said global supplies of grains remain sufficient to meet needs. “Instead of casting blame, we should be investing in technologies that will help farmers in developing nations improve their productivity,” the RFA said. “We should also focus more intently on helping developing nations invest in renewable fuels and other technologies that mitigate climate change impacts and incentivize more efficient and productive farming practices.”