Falling corn use reflects financial problems in ethanol
Dec 12, 2008 9:52 AM,
By Elton Robinson
Farm Press Editorial Staff
Statistics tell a troubling story for the U.S. ethanol industry.
In its December 11 World Agricultural Supply and Demand Estimates, USDA projected lower U.S. corn use mostly due to reductions in ethanol use and corn exports. Ethanol use was projected 300 million bushels lower (7.5 percent) as prospects for blending above federally mandated levels decline, the report said.
USDA said that financial problems for ethanol producers are reducing plant capacity utilization for existing plants and delaying plant openings for those facilities still under construction. Falling gasoline prices have also resulted in high relative prices for ethanol, reducing blender incentives.
Despite reductions in expected meat production, corn feed and residual use was raised 50 million bushels as lower ethanol production reduced the availability of distiller grains. Corn exports are projected 100 million bushels lower reflecting strong competition from larger foreign grain supplies and the slow pace of sales to date. Projected ending stocks were raised 350 million bushels.
Meanwhile, the National Agricultural Statistics Service pegged U.S. cotton production at 13.6 million bales, up 1 percent from last month but down 29 percent from last year. Yield is expected to average 843 pounds per harvested acre, up 6 pounds from last month but down 36 pounds from the record high yield of 2007.
Upland cotton production is forecast at 13.2 million bales, up 1 percent from last month but down 28 percent from 2007. Producers are expecting increased yields in the Southeast with record yields expected in Alabama, Florida, and South Carolina. Pima production is forecast at 444,000 bales, down 3 percent from last month and down 48 percent from last year.
Domestic mill use was reduced 100,000 bales, reflecting a marginal decline from the level of recent months. Exports were reduced 750,000 bales, as sharply lower world consumption is anticipated to limit demand for U.S. cotton. U.S. ending stocks were raised nearly 15 percent from last month to 7.1 million bales.
World production was reduced 1.4 million bales from last month’s estimate. World consumption was reduced sharply for the second consecutive month, as deteriorating economic conditions continue to fade demand prospects. World stocks were raised 2.4 percent.
Sorghum exports were reduced 10 million bushels based on the slow pace of sales and shipments. Sorghum feeding was raised an offsetting 10 million bushels.
Projected U.S. rice exports were lowered 1 million hundredweight to 106 million hundredweight, all in long-grain. Rough rice exports were raised 1 million hundredweight to 39 million hundredweight, while combined milled- and brown-exports (on a rough-equivalent basis) were lowered 2 million hundredweight to 67 million hundredweight. Rice ending stocks were projected at 23.4 million hundredweight, 2 million hundredweight below last month, with the reduction all in long-grain.
USDA raised projected global rice production slightly. Global ending stocks for 2008-09 were projected at 80.8 million tons, up slightly from last month.
Although global rice prices have trended downward since the beginning of the marketing year, they are declining at a slower-than-expected rate, according to USDA. Government policies in Thailand (intervention program) combined with continued export bans by India and Egypt are affecting global prices.
U.S. soybean exports were raised 30 million bushels to 1.05 billion bushels reflecting strong early season shipments and sales, especially to China. Projected soybean ending stocks are unchanged at 205 million bushels.
Projected soybean production for India increased 500,000 tons from last month to a record 9.7 million tons. Brazil soybean production was reduced 1 million tons to 59 million tons due to lower projected area.
Projected U.S. wheat ending stocks for 2008-09 were raised 20 million bushels in December on higher imports and lower food use. Global 2008-09 wheat production is projected at 684 million tons, up 1.6 million from last month. Brazil’s production was raised 400,000 tons based on recent government estimates.
World wheat consumption for 2008-09 was lowered mostly reflecting the reduction in U.S. wheat food use. Global ending stocks were raised 2.1 million tons in December.
email: erobinson@farmpress.com
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