The rapid growth in industrial use of corn over the past two years has been driven by ethanol production, says Darrel Good, University of Illinois Extension Economist in a release on the university’s Farmdoc web site. The year over year increase in 2003-04 is estimated at 204 million bushels or 20.5%.
“Domestic use of corn was record large during the 2003-04 marketing year, reaching an estimated 10.256 billion bushels. Feed and residual use, estimated at 5.781 billion, was slightly below the record consumption of 2000-01 and 2001-02, but food and industrial use was record large by a wide margin,” he says.
Good says corn use for ethanol should expand significantly for the current marketing year, due to increased processing capacity, low corn prices, high petroleum prices, and a continuation of federal subsidies.
Given the current economic environment, the current USDA forecast for domestic consumption in the year ahead may understate the potential for corn use for ethanol production, Good says.
“We are using a projection of 2.8 billion bushels for all seed, food, and industrial uses,” he says.
“While US and world corn supplies are abundant for the 2004-05 marketing year, the rapid expansion in consumption raises questions about the ability of future production to keep pace,” he says.
“If corn used for ethanol production expands another 150 million bushels, feed and residual use grows another 100 million bushels, and exports move up 100 million bushels (as a result of reduced Chinese exports), there could be a market for 11.125 billion bushels of US corn during the 2005-06 marketing year.
“With stocks at the beginning of the 2005-06 marketing year at 1.8 billion bushels, the 2005 crop would have to be near 10.325 billion bushels to maintain 2005-06 marketing year ending stocks at one billion bushels,” he says.
Doesn’t expect large increase in corn acreage in 2005
“Corn acreage might continue to expand in 2005, even with significant increases in p roduction costs, due to high average yields experienced the past two years. A large increase, however, would not be expected,” Good said.
If harvested acreage is near 74 million in 2005, the national average yield would need to be near 140 bushels to produce a crop of 10.325 billion bushels.
“Prior to this year, expecting a yield near 140 might have been too optimistic,” Good says. “Now, a yield of 140 seems to be a modest expectation.
“However, as recently as 2002, the national average yield was ‘only’ 129.3 bushels. At 129 bushels, the 2005 crop might be near 9.55 billion bushels and use during the 2005-06 marketing year would be limited to about 10.5 billion bushels.”
Source: agriculture.com Oct 21, 2004.