USDA Offers Optimistic Outlook for Corn Crop

The first U.S. Department of Agriculture outlook for this year’s corn crop is calling for record yields and record production, while corn use for ethanol is expected to remain the same.

The May 10 World Agricultural Supply and Demand Estimates report projects U.S. feed grain supplies for 2012/13 at a record 416.3 million tons, up 16 percent from 2011/12 at a record 416.3 million tons, with corn production called at a record 14.8 billion bushels, up 2.4 billion from 2011/12.

A projected 5.1-million acre increase in harvested area and higher expected yields, compared with 2011/12, sharply boost production prospects. The 2012/13 corn yield is projected at a record 166.0 bushels per acre, 2.0 bushels above the 1990-2010 trend reflecting the rapid pace of planting and emergence. Despite the lowest expected carry-in in 16 years, corn supplies for 2012/13 are projected at a record 15.7 billion bushels, up 2.2 billion from 2011/12. Total U.S. corn use for 2012/13 is projected up 9 percent from 2011/12 on higher feed and residual disappearance, increased use for sweeteners and starch, and larger exports.

The report kept projected corn use for ethanol unchanged at 5 billion bushels for this year on weak gasoline consumption limiting domestic blending opportunities. In an analysis of the report this morning, the Renewable Fuels Association said, “While still just an estimate, the confidence USDA is displaying in American farmers underscores their unique ability to feed the world and help renewably fuel the nation. There is a lot of growing season left, and these numbers could change by the fall. But, with normal growing conditions it is clear that farmers will continue to meet the bell and provide safe, reliable food and clean, domestic fuel and silence those ‘chicken littles’ that perpetually predict a shortage of corn and catastrophe in the grocery aisle.”

Ethanol Blend Wall Still There

The ethanol blend wall is still a reality for the industry, according to the chief economist with the U.S. Department of Agriculture.

“For the time being, I think we are at a blend wall and it’s a pretty hard wall,” said USDA’s Joe Glauber during a recent gathering of farm broadcasters in Washington DC. Glauber says the general feeling now is that the blend wall is about 13.5 billion gallons. “What gets produced in excess of that has to go out through the export market,” he said. “Last year we had a spectacular year, exporting more than a billion gallons, but most people think that won’t happen this year.” He expects Brazil in particular will not import as much ethanol this year.

While the industry is moving steadily toward the 15 billion gallon corn ethanol cap under the Renewable Fuel Standard (RFS2), Glauber says right now the market is steady at about 10 percent of ethanol blended fuel and getting E15 in the marketplace is moving slowly toward reality. “But you still have the underlying economics of whether or not a gas station is going to change over equipment to be able to sell E15,” he said. “The likely thing would be so-called blender pumps, which are expensive propositions.”

The expense of putting in blender pumps for stations can be offset by numerous federal, state and industry programs that offer grants and incentives to stations, but the oil companies are still putting up walls to discourage station owners from doing so. Last week, the American Petroleum Institute (API) proclaimed that EPA approval of E15 poses “serious safety and environmental concerns for consumers” because “an estimated half of all gasoline station equipment is not compatible with E15.”

Listen to Glauber’s comments here: USDA Chief Economist Joe Glauber

While there are some legitimate concerns with infrastructure, the industry is actively working with all stakeholders to address any safety issues regarding E15. “The nation didn’t have the infrastructure in place for a transcontinental railroad, but that didn’t stop us from moving forward because it was in the best interest of the nation. The same is true with America’s fueling infrastructure,” said Matt Hartwig with the Renewable Fuels Association (RFA). “Because some upgrades may be needed is no reason to accept the status quo as the best we can do.”

RFA has a website dedicated to E15 information (www.E15fuel.org), a misfueling mitigation plan to help retailers avoid confusion, and an E15 Retailer Handbook for gas station owners seeking to offer E15.

Ag Secretary Urges Oil Companies to Accept E15

Secretary of Agriculture Tom Vilsack today urged petroleum companies to increase adoption of 15% ethanol blended gasoline (E15) to help decrease reliance on foreign oil.

“The availability of E15 will increase America’s energy security and spur additional job creation,” Vilsack said. “The Obama Administration has an ‘all-of-the-above’ to promoting domestic energy security, and increasing the percentage of ethanol to be blended with gasoline will help boost economic growth while lessening the nation’s dependence on foreign oil.”

Vilsack sent out comments in a news release today, shortly after the American Petroleum Institute held a press conference call charging that EPA approval of E15 “could result in serious safety and environmental problems for consumers” due to incompatible gasoline station equipment.

USDA notes that in order to enable widespread use of E15, the Obama Administration has set a goal to help fueling station owners install 10,000 blender pumps over the next 5 years. In addition, both through the Recovery Act and the 2008 Farm Bill, the U.S. Department of Energy (DOE) and U.S. Department of Agriculture have provided grants, loans and loan guarantees to spur American ingenuity on the next generation of biofuels. Before it can be sold, manufacturers must first take additional measures to help ensure retail stations and other gasoline distributors understand and implement labeling rules and other E15-related requirements.

Early Planting Fuels Corn Production Speculation

Corn planting is running well above normal across the country, fueling speculation that this year’s crop could be huge.

The crop progress report
this week shows that seven percent of the nation’s corn crop is now planted – more than double normal for this time of year. Progress in some Midwestern states has already hit double digits. Missouri has 23% of the crop planted compared to the five-year average of 8% and Illinois is at 17% where just 3% is normal. Huge gains were seen from the previous week in states like Tennessee, which jumped from 15 to 46% planted in a week, while Kentucky went from 5 to 32%. Normally, only 10 of the 18 top corn states have corn in the ground by this time of year but right now only North Dakota and Wisconsin have nothing to report.

Doing the math on the USDA Prospective Planting report predicting almost 96 million acres of corn this year and using only the five year average corn yield of 154.3 bushels per acre, there is the potential for a 14.8 billion bushel crop.

“Certainly if we have a trend yield, we’ll see record production and we should see substantial rebuilding of stocks,” said USDA chief economist Joe Glauber. “We were calculating with even 94 million acres we would see almost a doubling of stock yields.” That, he says, should moderate corn prices considerably which would provide some relief for both livestock and ethanol producers. The newest World Agricultural Supply Demand Estimate projects season-average corn prices at $6.00 to $6.40 per bushel.

The report also notes that corn to produce ethanol in 2011/12 is unchanged again this month at 5 billion bushels, while the latest monthly data from the Energy Information Administration (EIA) indicates that average daily ethanol disappearance fell to a 23-month low in January pushing ethanol stocks to a new record high. Weekly EIA ethanol production data suggest average daily ethanol production during February and March has continued to fall hitting its lowest level since early last fall.

Join Ag Sec. Vilsack in First Twitter Chat on Energy

Tomorrow at 1:30pm EDT, Ag Secretary Tom Vilsack will hold the first “USDA Virtual Office Hours on Twitter.” I’d recommend using TweetChat, Twubs or an app like TweetDeck or HootSuite to follow along. It looks like these planned monthly sessions will focus on different topics. Tomorrow it’s renewable energy. You’re asked to submit your questions via Twitter to either @USDA or #askUSDA.

Agriculture Secretary Tom Vilsack will sit down to answer YOUR questions on the Department’s renewable energy programs, and how USDA is helping build a secure energy future for America. He will be joined by Sarah Bittleman, USDA Senior Advisor on energy policy.

USDA Virtual Office Hours, a live question and answer series that will be held monthly, allows stakeholders to directly engage with USDA leadership and subject matter experts through Twitter. Sessions will be focused on a specific mission, issue or program, as aligned with the Department’s strategic goals and based on stakeholder interests.

In January, USDA launched www.USDA.gov/energy to serve as a one-stop shop for data and information about energy efficiency and renewable energy programs. This site allows individuals to learn more about USDA’s programs and see how their community can get involved in an expanding renewable energy and bio-based economy that is creating jobs and driving economic growth across rural America. To learn more about USDA’s accomplishments in renewable energy, read the results document HERE.

Remember to tune in online by following @USDA and using #askUSDA and #energy.

Vilsack Announces Advanced Biofuels Roundtable

Agriculture Secretary Tom Vilsack addressed the 2012 Advanced Biofuels Leadership Conference, presented by Biofuels Digest, Tuesday in Washington D.C. and announced an upcoming Advanced Biofuels Industry Roundtable to be held next month.

Vilsack said the Roundtable will be a joint effort between USDA, the Department of Energy, and the Department of Navy and will be held on May 18 “as the next step in the partnership with the private sector to produce advanced biofuels to power military and commercial transportation.”

“Advanced biofuels are a key component of President Obama’s ‘all-of-the-above’ energy strategy to limit the impact that foreign oil has on our economy and take control of our energy future,” said Agriculture Secretary Tom Vilsack. “By bringing together farmers, scientists, and the private sector to produce fuel for the American military, we can help spur an industry producing biofuels from non-food feedstocks all over the nation, strengthen our middle class, and help create an economy built to last.”

The roundtable will focus on efforts to accelerate the production of bio-based fuels for military and commercial purposes and will address the next steps for the production of aviation biofuels and marine diesel. Topics will include production, distribution and contracting, and best practices. This roundtable follows a “match making” event hosted last week at USDA headquarters to promote connections between agricultural producers of energy feedstocks, and biorefineries.

The conference this week in Washington has the theme of “Go Big, Stay Strong” and features dozens of top officials from advanced biofuels companies, as well as a special full-day session Thursday on Military & Aviation Biofuels.

USDA Announces Ten Rural Energy Grants

USDAThe U.S. Department of Agriculture has selected 10 projects for funding 10 to help rural small businesses and agricultural producers reduce energy consumption and implement renewable energy technologies. The funding will be made available through the Rural Energy for America Program (REAP), which was authorized by the 2008 Farm Bill.

“For the first time in 13 years, imported oil accounts for less than 50% of the oil consumed in America. That is because we are producing more domestically, using more alternative fuels, and using less energy through energy efficiency efforts,” said Agriculture Secretary Tom Vilsack. “Through the REAP program, USDA has partnered with more than 13,000 of America’s farmers, ranchers and rural businesses to save energy and improve their bottom line by installing renewable energy systems and energy efficiency solutions. USDA will continue to help make America more energy efficient, and in doing so, more competitive by encouraging rural small businesses to continue to build renewable energy systems”

The ten grants in nine different states include such alternative energy projects as $80,000 grant to develop on- and off-shore wind projects in Cumberland County, Maine. REAP loan guarantees and grants can be used for renewable energy systems and energy efficiency improvements; and grants for feasibility studies, renewable energy development assistance and energy audits.

Most Corn Acres Since 1937 Expected

The last time the United States planted as many corn acres as USDA is predicting for this year, Franklin D. Roosevelt was just entering his second term as president.

It was 1937 when an estimated 97.2 million acres were planted. This year, the USDA Prospective Planting report predicts that corn growers will plant nearly 96 million acres – 95.9 million to be exact. That’s four percent more than last year and nine percent higher than in 2010. Corn acres are expected to increase or stay the same in 40 states, with the biggest increases in Indiana, Iowa, Nebraska, North Dakota and Ohio.

“Even after a difficult growing season last year, farmers harvested a bountiful crop to meet all needs, and it seems that they are on track to break records in 2012,” said National Corn Growers Association President Garry Niemeyer of Illinois. “This report shows that the innovative American farmer understands the increasing global demands of corn for food, feed, fuel and fiber and that they see the importance of meetings those needs.”

The greater acreage could more than make up for the lower grain stocks in USDA’s latest Quarterly Report, also released on Friday. In that summary, USDA says corn stocks are 8% lower than they were a year ago at just over 6 billion bushels. Of that, 3.19 billion bushels are stored on farms, down 6% from last year.

The unseasonably warm weather already this spring has farmers itching to plant, but most in the Midwest are holding off for a few more weeks, just to be safe. Nebraska Corn Board Director of Research Kelly Brunkhorst says farmers in the Cornhusker State are responding to market signals with the investment necessary to meet demand. “That corn is converted to meat, milk and eggs, ethanol, distillers grains, bioplastics and more,” Brunkhorst said. “Corn is the foundation for all of that, so getting the crop in the ground and off to a good start this spring is critical.”

Nebraska farmers planted 9.85 million acres to corn last year – largest acreage since the 1930’s – and they intend to top that by 450,000 this year.

Agriculture Secretary Encourages E15 Adoption

vilsack at national ethanol conferenceThe best way to help the U.S. ethanol industry right now is to encourage the adoption of E15 by fuel retailers, according to Agriculture Secretary Tom Vilsack.

During a telephone press conference on Tuesday promoting USDA’s Rural Energy for America Program (REAP), Vilsack was asked by a reporter what can be done to help the struggling ethanol sector right now.

“If you take a look at the long term history of ethanol, you’ll see that there are peaks and valleys in this commodity,” Vilsack noted. “Our focus is primarily on encouraging blenders to embrace E15. EPA has authorized the use of E15 and this obviously would be a God send.”

Vilsack added that they want blenders to register with EPA to get E15 in the market and they are looking for ways to encourage distribution. “At the same time, we’re also looking at alternative ways to produce ethanol through non-food feedstocks so we can spread the good work this industry’s doing in keeping gas prices down further than they would otherwise be.”

The secretary referenced an Iowa State University study that concluded ethanol helps save motorists up to $1.30 per gallon. “So we obviously need a robust biofuel industry,” he said.

Listen to or download Vilsack’s comments here: Secretary Vilsack on E15

USDA Plays Biofuels “Matchmaker”

USDAThe U.S. Department of Agriculture will be hosting a “match making day” later this month to promote connections between agricultural producers of energy feedstocks with biorefiners seeking to produce biofuels for commercial sale and consumption.

Officials from the U.S. Department of Navy, U.S. Department of Energy, and the Federal Aviation Administration will also attend the March 30 event at USDA headquarters with the goal being to improve awareness and increase understanding of the biofuels supply-chain links between those involved in feedstock production and the processors of that feedstock into biofuels, including logistical challenges, potential roles of service providers, and potential pitfalls.

At this meeting, federal officials will provide a short profile of each section of the supply chain and representatives from the participating stakeholders will respond with brief presentations that outline their experiences in that respective supply chain sector, barriers encountered and lessons learned. They will outline potential growth and opportunities.
Short presentations will be made at the top of each hour leaving time for discussion at each table, at which a representative from each of the sectors of the biofuels supply chain should be seated, as well as one or more government official.

The event is free but participants must register by sending an email to: OSEC-RESupplyChain@osec.usda.gov with information on company, names and titles of attendees and position on the biofuels production value chain (i.e., feedstock seed developer or provider, feedstock grower or harvester, feedstock processor, feedstock transporter, feedstock storer, bio-refiner, feedstock machinery manufacturer/provider, other). More information is available by calling 202-401-0461.