There were not many changes in the February World Agriculture Supply and Demand Estimate (WASDE) report out today, except in the corn department. Corn used for ethanol is projected 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January.
USDA chief economist Joe Glauber says ethanol plants are using more corn than expected, almost 8.5 percent more than last year. “The (ethanol) production levels themselves suggest that we’re producing at a level above the mandated levels under the Renewable Fuels Standard,” Glauber told USDA Radio. “For corn use this is obviously a record and it now probably accounts for at least 40 percent of the corn use at least this year.”
Ethanol interests are concerned that the report may flame the food versus fuel debate fire again, despite the fact that farmers are likely to respond to higher corn prices by planting more than enough corn this year to meet all needs.
“I have said it before and it looks like I will say it again, America’s farmers are second to none when it comes to production,” said Growth Energy CEO Tom Buis. “Our farmers are getting more corn out of every acre thanks to better science in seeds, precision farming, and technology and they will continue to meet our nation’s demands for food, feed and fuel.”
National Corn Growers Association President Bart Schott agrees in a new NCGA editorial on food versus fuel. “We are growing more corn on each acre, thanks to technology in the seed and practices on the farm. And we will do so for years to come,” writes Schott. “In 2010, U.S. growers reached an average yield of 152.8 bushels per acre. In 2000, it was 136.9 bushels per acre and in 1990 the average yield was 118.5. Some seed companies and others think we can reach 300 bushels per acre.”
Even if the report is overestimating corn for ethanol use, as the Renewable Fuels Association believes, RFA’s Matt Hartwig says it will still have an impact on the commodity market and prices. “These revisions will add fuel to the speculative fire, likely pushing prices for corn and other commodities higher. Many will use strong ethanol demand as the rationale to drive the price of corn futures as high as the market will bear. In turn, this will likely cause ill-informed industries and talking heads to pronounce U.S. ethanol production as the root cause of food inflation the world over.”