(Posted Tue. Mar 10th, 2015)
The amount of corn necessary to make a gallon of ethanol is less than previously believed according to a U.S. Department of Agriculture report released today. In lowering the projected demand by the ethanol market for U.S. corn by 50 million bushels, the agency cited “a higher rate of conversion than previously assumed” as the reasoning for the adjustment. The information upon which this analysis was based came from the National Agricultural Statistics Service’s new Grain Crushings and Co-Products Production report.
“What is most remarkable about this supply and demand report is the light it sheds on a topic of great concern to U.S. corn farmers- recognition of the growing efficiencies in the ethanol industry,” said NCGA President Chip Bowling, a Maryland corn farmer. “For many years, we have strongly asserted that the ethanol industry continues to improve and those productivity gains should be taken into consideration. With the simple justification offered for the analysis, USDA made a great step forward in showing its growing appreciation for the advances made in ethanol production and, thus, the ever-increasing benefit it offers Americans.”
While USDA estimates for corn use in ethanol production were lowered by 50 million bushels, the overall drop was partially offset by higher than expected production over the winter months. The demand decline was more than offset by projected increases in demand for corn from the export and feed and residuals markets of 50 million bushels each.
Projected ending stocks were lowered by 50 million bushels in light of the other adjustments. Average farm price estimates were raised by five cents at the midpoint to $3.50 to $3.90 per bushel.