Forecast sees more corn for fuel than feed

Hoard's Dairyman: 

Forecast sees more corn for fuel than feed

Date: 
Fri, 08/19/2011

USDA expects ethanol to use the biggest share of 2011 crop.

For the first time ever, ethanol plants are expected to use more of the nation’s corn crop in 2011 than livestock producers do. If that happens, it means $7-per-bushel corn prices may not go away anytime soon.

Oil has been well below $90 per barrel for two weeks now, but new forecasts for the 2011 corn crop still point to the likelihood that dairies and other livestock operations will face tight supplies and high prices this fall.

A big part of that bad news is continued strong competition from ethanol plants. Instead of their demand for corn backing off because of lower oil prices, USDA’s mid-August Crop Production and Supply/Demand Report said 200 million more bushels are expected to be used for ethanol rather than animal feed.

“That’s a first-time ever change. For forever, feed was the largest single user of corn,” said University of Missouri Extension economist Ron Plain.

Compounding the ethanol situation was USDA’s August 4 downgrade estimate of average yield and overall size of the 2011 corn crop. Even though total planted acres nationwide is 92.3 million, the second-most since 1944, bad weather in Texas and the Midwest caused USDA to revise its per-acre yield estimate down to 150 bushels, a 5.5 percent cut.

That’s not all. Plain points out that last year’s carryover of corn stocks was the lowest in 14 years, which “is why corn prices are going to be record high this year.”