A bumper crop has helped lower feedstock prices for grain-based biofuels, but the industry is still expected to stagnate. Patrick Westhoff, director of the Food and Agricultural Policy Research Institute, told attendees of the American Farm Bureau Federation’s 96th Annual Convention and IDEAg Trade Show that this year’s bumper crop and low prices is good news for those buying the green fuels’ feedstocks, but lower expected demand for biofuels will still hurt.
“We’ll have significantly smaller corn yields in 2015/16 caused in part by the low demand for ethanol. Yield numbers will change.”
Due to corn prices dropping to levels not seen in years, Westhoff said that farmers will plant less corn in the next two years. More than 90 million acres were planted in 2014 and he projected that only 87.9 million acres will be planted in 2015 and 89.7 million acres in 2016.
Westhoff said large corn and soybean crops will weigh on grain and oilseed prices in the short run, and that although average corn prices remain low by 2007-2012 standards, they are still above pre-2007 levels.
Livestock producers are expected to benefit from the big crop with lower prices for their animal feed. But we’ll need to see what happens to that industry if those smaller grain crops sizes driven by lower biofuels demand come to fruition.