Aug 29, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin

Corn Use Up in Ethanol

August 24, 2013
By: Fran Howard, AgWeb.com Contributing Writer
ethanol
  
 
 

Industry eyes better times after reduced production 

According to USDA’s World Agri­cultural Supply and Demand Estimates, corn used in ethanol fell from a high of 5 bill­ion bushels in 2011 to 4.65 billion bushels in 2012. This year, USDA expects 4.9 billion bushels of corn to be used by the ethanol industry.

The latest estimate from USDA is an increase from its earlier estimate released in February of only 4.675 billion bushels for 2013.

Monthly usage of corn used in ethanol dropped significantly in late 2012/early 2013 due to drought-induced higher corn prices that reduced margins for ethanol producers. "That use has started to recover," says Chad Hart, agricultural economist with Iowa State University.

"Gasoline prices have been staying at a fairly high level, which has also opened up ethanol margins again," Hart says. "When drought kicked in last year, the ethanol industry pulled back 10% to 12%. During the past two to three months, though, the ethanol industry has come back into the corn market."  

Hart doubts that corn used in ethanol will breach 5 billion bushels next year, but it will be close. He expects ethanol plants to grind 4.9 billion to 4.95 billion bushels of corn in 2014.

Longer term, though, the forecast becomes a bit iffy, particularly if gas consumption continues to drop in the U.S. as consumers drive more energy-efficient vehicles. If gasoline consumption falls, so will the overall use of ethanol, which is blended into gasoline.

U.S. gasoline use has fallen yearly since 2007. The Energy Information Administration projects gasoline consumption will steadily fall during the next 25 years, dropping by about 7%.

Advanced biofuels founder. Unlike the ethanol industry, though, advanced biofuels are floundering. Due to declin­ing gas use and the economic viability of new fuels, investments into advanced biofuels, primarily those made from cellulosic materials, are evaporating, and it is unlikely that the advanced biofuel industry, which does not include ethanol, will meet its renewable fuel mandates.

According to recent news reports, both BP and Royal Dutch Shell Group recently stopped funding four separate biofuel ventures due to slow or poor returns on investment. Exxon and Chevron pared back on biofuel investments earlier after failing to find a fuel that met their investment objectives.

"The mandate for advanced biofuels is flexible," Hart says. The bigger worry is whether ethanol will retain its current share of corn use if gasoline consumption continues to ramp down, particularly in light of the Environmental Protection Agency’s August announcement that it plans to scale back its renewable fuel mandate for 2014 in light of "infrastructure- and market-related" factors. 

ethanol use chart

See Comments

FEATURED IN: Farm Journal - September 2013
RELATED TOPICS: Corn, Crops, Biofuels, Ethanol

 
Log In or Sign Up to comment

COMMENTS

No comments have been posted



Name:

Comments:

Receive the latest news, information and commentary customized for you. Sign up to receive Beef Today's Cattle Drive today!. Interested in the latest prices for cattle in your area? See highlights of the latest for-sale cattle in the Cattle-Exchange eNewsletter.

 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions