The latest USDA supply/demand forecast out this week says that corn use for ethanol will outpace livestock feed use for the first time, but some are questioning those figures and that interpretation.

The July 12 World Agricultural Supply Demand report increased corn beginning stocks by 150 million bushels, while total U.S. corn use for 2010/11 was lowered by 145 million bushels. The report increased ethanol use by 50 million bushels to 5.05 billion bushels, based on “larger supplies and improved ethanol producer margins,” which is 50 million more than the even 5 billion projected for feed and residual use.

For 2011/12, the report raises feed and residual by another 50 million bushels with larger supplies and lower expected prices, while corn use for ethanol is raised 100 million, doubling the spread between the two usage categories to 100 million bushels.

Matt Hartwig with the Renewable Fuels Association contends that saying ethanol is surpassing livestock feed use for corn is not exactly correct. “First, USDA is assuming more than 14.1 billion gallons of ethanol production for the 2010/2011 marketing year, based upon the industry average of 2.8 gallons per bushel and the USDA estimate of 5.05 billion bushels of corn. However, calendar year 2011 ethanol production is on pace for 13.7 billion gallons, according to the Energy Information Administration. USDA is either finding ethanol production EIA is unaware of, or they are using out of date ethanol yields. Based upon RFA calculations of corn use (RFA assumes a conservative 2.77 gallon per bushel yield), total gross corn use in ethanol production will be less than 5 billion bushels in 2011.”

In addition, Hartwig notes that the USDA estimate does not properly account for the one third of each bushel of corn entering an ethanol biorefinery that is returned to the livestock feed market in the form of distillers grains. “Even if USDA’s estimates are correct, which they likely are not, the total net corn use for ethanol is 3.3 billion bushels,” he says.