Ethanol Industry Says USDA Numbers Show Marketís Working
The numbers from USDA Friday were slightly worse than analysts were expecting. On average - pre-report projections were for a 10.97-billion bushel corn crop on a yield of 126.2-bushels per acre. While the harvest this year will be quite a bit smaller than initially expected - Renewable Fuels Association Vice President for Research and Analysis Geoff Cooper says it's remarkable farmers are still on track to produce the eighth-largest corn crop on record given the weather challenges they have faced. Growth Energy CEO Tom Buis agrees - noting that even with the worst growing conditions in 57 years - this year's corn crop is estimated to be the eighth largest in history. He says that's thanks to today's technology and the productivity of America's farmers - and says any attempt to change the Renewable Fuel Standard would simply be a knee-jerk reaction to the benefit of Big Oil.
Buis says there will be enough corn. Buis and Cooper say Friday's USDA report demonstrates how the market is already working to cut demand. According to Cooper - USDA projects significant rationing for all end users. He says feed and residual use was dropped to 4.08-billion bushels - down 15-percent from the July estimate. Ethanol and co-products use was trimmed to 4.5-billion bushels - a decline of eight-percent from July. Cooper says this implies 12.6-billion gallons of ethanol production from September 1, 2012 to August 31, 2013 - along with 35-million metric tons of animal feed. Notably - Cooper says - animal feed production by the ethanol industry would be the equivalent of 1.37-billion bushels of corn - based on USDA's estimates - meaning total feed and residual use would be closer to 5.45-billion bushels and net use for fuel ethanol would be closer to 3.13-billion bushels. Exports were cut to 1.3-billion bushels - down 19-percent from July.
Pointing to the world numbers - Cooper says 2012-13 global grain output would be the second largest on record. Based on USDA estimates - the U.S. ethanol industry will use 2.9-percent of the world grain supply on a net basis - the lowest percentage since 2008-09.
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