2015 corn prices are expected to drop as USDA predictions for ethanol demand remains steady

January 5, 2015 |

In 2015, corn prices are expected to return to “more reasonable levels” as the demand side remains supportive. For the first quarter of the marketing year, USDA projected corn used for ethanol at 5.2 billion bushels, slightly higher than last year. Ethanol production was about 5 percent larger than the same quarter last year, compared to the 0.3 percent increase for the year implied by the USDA forecast of corn consumption for ethanol production. Darrel Good, University of Illinois agricultural economist, looks for domestic ethanol consumption to remain well supported and ethanol production is expected to remain large well into the second quarter of the corn marketing year.

On the supply side, the U.S. Department of Agriculture projects a 2 billion-bushel surplus, but there is some question of what the actual production totals will be due to discrepancies between USDA and Farm Service Agency estimates. FSA released an updated report Dec. 15 that certified producers have 86.3 million corn acres, only 443,000 more than reported in November and 4.6 million less than the current USDA estimate of 90.885 million acres. As in past years, the difference will eventually narrow to a bit less than three million acres. If the USDA harvested acreage estimate is reduced by 1.6 million acres next month, with no change in the yield estimate, the 2014 production estimate would decline by 277 million bushels.

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Category: Fuels

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