Ethanol Industry Comments on WASDE Report

Cindy Zimmerman

The USDA World Agricultural Supply and Demand Estimate (WASDE) released this morning that shows corn ending stocks unchanged despite a 50 million bushel increase in corn use for ethanol also shows a gain in global grain stocks.

According to the report, global coarse grain supplies for 2010/11 are projected 6.3 million tons higher this month with a 1.8-million-ton increase in beginning stocks and a 4.5-million-ton increase in production.

Renewable Fuels Association LogoRenewable Fuels Association (RFA) VP of Research and Analysis Geoff Cooper says the report should ease some of the tension in the world corn market. “While stocks are still relatively tight, today’s report shows that the corn supply picture is not quite as bad as some were expecting. Corn stocks—both in the U.S. and globally—are a little more robust than the market was anticipating,” commented Cooper.

RFA CEO and President Bob Dinneen notes that global corn production is looking stronger than many were expecting. “In particular, production in South America and Africa has been robust. Farmers in countries like Uganda are responding to higher world prices by increasing production through the use of better technology and improved farming practices. Higher prices are allowing farmers in sub-Saharan Africa and other regions to participate in the world market and likely many of them are earning a profit on their crops for the first time in years,” he said.

Growth EnergyGrowth Energy CEO Tom Buis says the strong production in South America and elsewhere around the globe are disproving fears of food shortages. “Fear in the market that the carryout number would go down didn’t come to fruition,” said Growth Energy CEO Tom Buis. “Now there is still a lot of volatility in the market, based on rumors of increasing sales to China, excessive speculation and profiteering in the commodities market,” said Buis. “But this newest USDA report proves what we’ve been saying all along, which is that the productivity of American farmers and farmers worldwide will meet the challenge to provide more than enough corn to meet demand. American farmers are expected to produce the largest crop ever this year.”

Domestically, USDA left the estimate for the 2010-11 U.S. corn carry-out unchanged at 675 million bushels. The trade was expecting carry-out to be lowered to 595 million bushels (to reflect lower-than-expected March 1 stocks number). Some analysts were expecting a drop to as low as 515 million bushels.

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