The Kansas City Federal Reserve held a Ag Sympoisum on July 16, 2012. The presentations are available on their website, but I thought I would recap some of the interesting things I found in reviewing the presentations.
William Hudson of the ProExporter Network had a presentation entitled "What Lies Beyond the Horizon for Farm Income? There is a lot of detail in his report, but here are a few things I found interesting:
- In the 2003/04 crop year, the US planted a total of 228.6 million acres to the top 10 major row crops. During the current crop year, the acreage had increase to 236.9 or about 8 million more acres.
- Corn acreage has increased from 70.9 to the current 89.1 or about 18 million acres of total increase.
- This increase was primarily contributed to a decrease in barley of 2, sorghum of 3, wheat of 4 and cotton of 2. The oilseeds had increased their acreage by about 2 million acres. The remaining 10 million acres would most likely come out of CRP and probably hay and other crop acres.
- World acreage for these same crops has gone from 1.959 billion acres to 2.143 billion or an increase of 184 million acres.
- Corn has increased by about 80 million acres, but wheat is up 33, oilseeds are up 69 (most likely South America) and rice is up 26. Barley has decreased by 18, sorghum by 9 and peanuts by 3.
- The 2002/03 corn crop had production of about 9 billion with 1 billion going to Ethanol. Last year's crop was 12.4 billion bushels with about 5 billion for ethanol. Net other use in 2002 was 8 billion and for last year it was 7.4 billion.
It seems looking at these numbers, that although ethanol production has greatly increased, corn production has kept up with the demand without taking too much other crop production acres away. Even if you totally remove ethanol out of the equation, the net amount of corn being used for ethanol, net of DDG for feed is most likely the equivalent of about 20 million acres (which is about equal to the net increase in corn acres) and since total world acres planted to corn is about 431 million acres, this represents about 5% of the overall land planted to corn (granted our yields are higher, but it would still only be a percent or two).
Based on this, it appears you can completely eliminate ethanol demand for corn acres and the underlying price of corn should not change that much. I am not economist, but this is what I find looking at his numbers.
I will do a few more posts on this and other information from the symposium.