Thursday, June 10, 2010

USDA sees more corn being used for ethanol

The Department of Agriculture has raised its estimates of corn used for ethanol, reflecting "the continued record pace of ethanol production and usage through March based on the latest data from the Energy Information Administration," Rita Jane Gabbett reports for MeatingPlace.com, a news service for the meat industry, which keeps a close eye on ethanol's effect on corn prices.

In its monthly World Agriculture Supply and Demand Estimates, USDA raised the corn-for-ethanol number in the marketing year that ends in September by 150 million bushels to 4.55 billion bushels, and its forecast for ethanol use in the 2010-11 marketing year by 100 million bushels, to 4.7 billion.

"Higher ethanol production is also supported by record production of gasoline blends with ethanol as indicated by weekly data from EIA through May and forecasts for rising gasoline demand during the summer driving season," Gabbett reports. "USDA said the increased ethanol use will more than offset reduced feed and residual use, which was lowered by 25 million bushels due to increased availability of distillers' grains."

Meanwhile, the department forecast slightly lower corn prices in the current year, based on prices reported to date, but higher prices next year. It cut the projected average for the current year 5 cents on both ends of the range, to $3.45 to $3.65 per bushel, but raised the 2010-11 average by 10 cents on both ends of the range, to $3.30 to $3.90 per bushel.

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