The Renewable Fuels Association (RFA) hosted a webinar this morning to discuss the new USDA Prospective Planting and Grain Stocks reports and what they indicate for America’s supply of corn and how demand from ethanol production might play into food pricing this year.
Some of the main points made by RFA VP of Research and Analysis Geoff Cooper about the reports relative to ethanol and food prices are:
1. The additional corn acreage is coming through crop switching, not land expansion
2. An average 159.7 bushels per acre will maintain current carry-out levels
3. 2011 ethanol production expected at 13.8-14 bg; about 5 billion bushels of corn
4. USDA is likely underestimating ethanol yield
5. On net basis, ethanol using only 23% of the 10/11 corn supply – not 40%
6. Food price inflation expected to be in line with average of 3.4%
7. Energy prices and speculation more important factors in food price increases
8. Corn is a minor cost component of most retail food items
9. Just 12 cents of every retail food dollar goes to the farm level
11. U.S. corn exports have not declined as ethanol use has expanded
12. U.S. ethanol uses 3% of world grain supply; grain not being “diverted” for fuel use
Cooper notes that the USDA prospective plantings report should be taken “with a grain of salt” since it only indicates farmers’ current intentions and will likely change as planting season gets underway.
Listen to Geoff Cooper’s presentation here: RFA's Geoff Cooper on USDA report