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USDA "Corn: Market Outlook" excerpts
History and Baseline predictions, 2005-14 full report
Updated date: May 3, 2005. For more info, contact: Allen Baker or Ed Allen
Corn Acres to Increase. The number of acres planted to corn is expected to total 81 million in 2005 and increase to 84 million by the end of the baseline. However, the number of acres available for crop plantings is limited. If more water were available for irrigation, additional land could be brought into production but that is not foreseen.
Corn Yields Continue to Rise. For the baseline analysis, yields for corn were determined by calculating the trend growth in yields since 1960 (1988 drought year was omitted). As a result of these calculations, corn yields are projected up 1.8 bushels per year over the baseline period. Increases in corn yields have been driven by continued improvements in plant genetics and equipment allowing faster earlier planting and harvesting, along with other advances such as better targeting of fertilizer needs.
Corn Supply and Use to Grow. Corn area is expected to grow and yields increase, resulting in new record corn production. Use will likely also set records as livestock herds grow, raising feed needs, and industrial uses for corn expand. China becomes a net importer in 2007/08 (see Baseline projections for world feed grains trade), contributing to projected exports of U.S. corn increasing throughout the baseline. ...
Corn competes mostly with soybeans for land and is used extensively in rotations with soybeans. Corn area grows relative to soybean area, as relative net returns are expected to favor corn throughout most of the baseline.
Gains in corn yields are expected to continue over the entire baseline period, facilitated by genetic improvements. Corn production is projected to increase, setting new records.
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Ethanol
Ethanol Use Continues to Grow. A ban on methyl tertiary butyl ether (MTBE) in some States is boosting the use of ethanol in gasoline to comply with the Clean Air Act's requirement for oxygenates in the fuel.
Corn used for producing fuel alcohol has grown sharply since the early 1980s. ... Policies are very important for the expansion of ethanol production. A federal tax credit for ethanol blending, currently 51 cents per gallon, is assumed to continue. However, the biggest factor underlying the recent expansion has been the adoption of ethanol by California, the Nation's largest gasoline market, after it prohibited the use of MTBE. The need to ramp up production to meet mandated use has boosted production, especially since New York and Connecticut have also banned MTBE. Ethanol is the principal replacement oxygenate where reformulated gasoline is used, requiring 2-percent oxygen by weight.
Policy-influenced market conditions are also critical determinants of ethanol production. More than half of all fuel ethanol is blended into conventional gasoline as a fuel or octane enhancer. Prices of ethanol relative to gasoline prices are a key component for determining how much ethanol is blended. The remaining ethanol is used for blending into reformulated gasoline, which will be important in California, New York, and Connecticut. It is also used in oxygenated gasoline for the winter carbon monoxide program.
While use of oxygenates largely results from mandated clean air requirements, fuel producers can choose among competing oxygenates based on their relative prices. Some States offer incentives that also influence demand for ethanol. For instance, Illinois has a sales tax exemption for ethanol, while Minnesota has mandated a year-round minimum oxygen content requirement for all gasoline sold.
Ethanol Coproducts. Despite its growth, direct feed use of corn is not as strong as it would be without coproducts from ethanol production. Ethanol wet mills produce corn gluten feed, corn gluten meal, and corn oil as coproducts, while dry mills produce distiller's dried grains (DDG). The baseline assumes that each 56-pound bushel of corn that goes into dry-mill ethanol production results in 17.5 pounds of DDG as a coproduct. The protein content of DDG for beef cattle is about 23 percent, compared to 48 percent for soybean meal and about 10 percent for corn. The energy content of DDG falls between that of corn and soybean meal. Thus, the baseline assumes that the DDG coproduct of dry-mill ethanol production substitutes for about a 50-50 split of corn and soybean meal in feed rations, or about 8.75 pounds each of corn and soybean meal for each bushel of corn used for ethanol production.
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http://zfacts.com/p/441.html | 01/18/12 07:22 GMT
Modified: Sat, 22 Jul 2006 00:18:31 GMT
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