According to the U.S. Department of Agriculture’s latest projections, ethanol will dominate the farm economy for the next decade.
USDA’s Interagency Agricultural Projections Committee, headed by the World Agricultural Outlook Board, this week released “USDA Agricultural Projections to 2016.” According to the report, “strong expansion of corn-based ethanol production in the projections affects virtually every aspect of the field crops sector, ranging from domestic demand and exports to prices and the allocation of acreage among crops.”
USDA analyst David Stallings says by the year 2009, ethanol will consume 30 percent of US corn production, compared to last year’s 20 percent. He expects acreage to increase to as much as 90 million acres by that year and prices to level off after that.
“We see a fairly rapid increase in corn prices for 2007-08 and 2008-09, and then peaking in 2009-10 at an average farm price of $3.75 per bushel,” said Stallings. They don’t expect corn prices to drop below $3.00 a bushel for the next decade.