There's Enough Corn to Go Around
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WASHINGTON--February 24, 2011: Agriculture Secretary Tom Vilsack says that we can turn more corn into ethanol without compromising food supplies. He made these remarks at a two-day Agriculture Outlook Forum.
Here are some number on corn production and prices from Joseph W. Glauber, Chief Economist, United States Department of Agriculture (USDA), February 24, 2011 in his speech, Prospects for the U.S. Farm Economy in 2011:
Total corn use is projected at 13.56 billion bushels. Higher exports and higher corn use for ethanol will more than offset an anticipated reduction in feed use. Feed and residual use is anticipated to fall slightly in 2011/12 as high feed costs limit expansion in the pork and poultry sectors and beef feeding declines with tighter feeder cattle supplies. Exports, however, are anticipated to increase to 2 billion bushels as reduced global use of feed quality wheat boosts world corn trade and consumption.
Corn use for ethanol continues to grow. Weekly ethanol production numbers suggest that ethanol production is currently running over 13.5 billion gallons on an annualized basis. This far exceeds levels implied by the mandated levels under the Renewable Fuel Standard (12.6 billion gallons in 2011). On average, production margins for ethanol producers remain positive as many plants appear to have forward-priced their corn requirements below the recent market highs. Incentives for ethanol blending remains strong with the Volumetric Ethanol Excise Tax Credit in place through 2011 and ethanol expected to remain attractively priced relative to gasoline. As a result, corn use for ethanol is expected to grow further in 2011/12 to a record 5.0 billion bushels. At this level, corn use for ethanol would account for 37 percent of total use and 36 percent of corn production.
With total supply at 14.425 billion bushels and total use at 13.56 billion bushels, ending stocks are projected at 865 million bushels in 2011/12, a modest 190-million bushel increase over the level projected for 2010/11 levels. Stocks-to-use levels will remain tight at 6.4 percent. Corn prices are forecast at a record $5.60 per bushel, $0.20 higher than the mid-point of the range forecast for 2010/11.
Higher than trend yields or larger planted area could help rebuild corn stocks, but stock levels are not likely to return to recent levels over the course of one or even two seasons. For example, if 2011/12 yields were to equal the record level of 164.7 bushels per acre achieved in 2009/10, ending stocks would exceed 1.1 billion bushels. And this assumes no increase in use for feeding, ethanol, or exports, an unlikely scenario. Further, assuming this yield and no increase in usage, 2011 planted area would have to increase 8 million acres to return stocks to the 2010/11 level of 1.7 billion bushels.
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