Agricultural News
AFBF Economist Believes More Corn Acres Could Help Encourage Increase in Ethanol Blend Rate
Tue, 30 Jun 2009 16:17:00 CDT
Two reports released on Tuesday by the Agriculture Department show a big jump in both planted acreage and stocks for corn, pointing to greater corn supplies this year, which could encourage the Environmental Protection Agency to increase its ethanol blend rate, according to Terry Francl, senior economist with the American Farm Bureau Federation. The futures trade in Chicago reflected the surprise in the market- as corn futures dropped the daily trading limit of thirty cents, with soybeans dropping just two cents per bushel.
“For the 2009/2010, the greater availability of corn supplies makes it more likely that the EPA will increase the ethanol blend rate from the current 10 percent to 12 percent or 13 percent, effective Jan. 1, 2010,” Francl said. “That will in turn utilize some 400 to 500 million more bushels of corn in the 2009/2010 crop year and reduce corn ending stocks by 300 to 400 million bushels. It is also important to remember that about one-third of the corn that is utilized as ethanol comes back as distillers dried grain, which replaces corn and some protein meal.”
USDA’s National Agricultural Statistics Service pegs corn stocks at 4.27 billion bushels as of June 1, up 6 percent from June 1 of last year.
“The corn stocks number suggest further downward adjustments in the amount of corn used to feed livestock and poultry will need to be made in the July USDA WASDE (World Agricultural Supply and Demand Estimate) report,” Francl said.
In the acreage report, NASS pegs corn plantings at 87 million acres, up about 1 million acres from last year and nearly 3 million more acres higher than the March estimate, which caught many analysts by surprise, Francl said.
As for soybeans, Francl said the 12 percent drop in soybean stocks, compared to June 1 of last year, points to a very tight supply-and-demand balance for the current crop year that ends in August. “Soybean supplies are very tight which implies further price rationing may still be needed,” Francl said.
Click here for the USDA Grain Stocks report issued on June 30.
Click here for the USDA Acreage report that came from NASS on Tuesday June 30, 2009 as well.
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