USDA lowers ethanol corn use projection despite improving margins

In Washington, the USDA released new projections for ethanol production, saying “U.S. feed grain supplies for 2009/10 are projected higher this month with higher expected beginning stocks and production for corn.” Corn production for 2009/10 is projected at 12.3 billion bushels, up 355 million from last month as higher  estimated area from the June 30 Acreage report boosts production prospects.  Corn supplies are projected at 14.1 million bushels, up 335 million bushels from 2008/09.  The USDA said that the decline in corn prices has boosted ethanol producer margins; however, reduced production of gasoline blends with ethanol in May and June, based on the most recent weekly data, indicate lower-than-expected ethanol corn use.

“Feed and residual use is lowered 100 million bushels as indicated by the June 1 stocks.  Exports are raised 50 million bushels based on recent increases  in shipments and the high level of outstanding sales for the 2008/09 marketing year.  The marketing-year average price is projected at $3.95 to $4.15 per bushel, down 15 cents on both ends of the range reflecting sharply lower summer price prospects.

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