Lower Corn Production Forecast May Fuel Ethanol Waiver

By CnAgri2012-08-16 19:45:08 Print

With the U.S. Agriculture Department抯 forecast that corn production this year will drop 13 percent to a six-year low as a result of the historic drought nationwide, the calls to divert more corn for food versus fuel are likely to grow more urgent, Ohio State University Extension economist Matt Roberts says.

In its monthly crops report, USDA last week cut its projected U.S. corn production to 10.8 billion bushels, down 17 percent from its forecast last month of nearly 13 billion bushels and 13 percent lower than last year. The projected corn production would be the lowest since 2006, meaning there will be intense competition for the reduced crops.

The USDA said it expects corn growers to average 123.4 bushels per acre, down 24 bushels from last year.

For livestock producers already suffering because of poor pasture conditions and high hay costs from the historic drought, that means higher feed costs and the potential that more of them will be forced to sell their herds because they can抰 afford to feed them, Roberts said.

This is prompting increased calls to divert less corn this year to ethanol by easing the U.S. ethanol mandate, he said. Under the Renewable Fuels Standard, U.S. fuel companies are required to blend 13.2 billion gallons of ethanol into gasoline in 2013, or about 10 percent of total gasoline usage, which requires converting some 40 percent of the U.S. corn crop into the biofuel.