The rapid growth in industrial use of corn over the past two years has been driven by ethanol production, says Darrel Good, University of Illinois Extension Economist in a release on the university’s Farmdoc web site. The year over year increase in 2003-04 is estimated at 204 million bushels or 20.5%.<\/b><\/p>\n
“Domestic use of corn was record large during the 2003-04 marketing year, reaching an estimated 10.256 billion bushels. Feed and residual use, estimated at 5.781 billion, was slightly below the record consumption of 2000-01 and 2001-02, but food and industrial use was record large by a wide margin,” he says. <\/p>\n
Good says corn use for ethanol should expand significantly for the current marketing year, due to increased processing capacity, low corn prices, high petroleum prices, and a continuation of federal subsidies. <\/p>\n
Given the current economic environment, the current USDA forecast for domestic consumption in the year ahead may understate the potential for corn use for ethanol production, Good says. <\/p>\n
“We are using a projection of 2.8 billion bushels for all seed, food, and industrial uses,” he says. <\/p>\n
“While US and world corn supplies are abundant for the 2004-05 marketing year, the rapid expansion in consumption raises questions about the ability of future production to keep pace,” he says.<\/p>\n
“If corn used for ethanol production expands another 150 million bushels, feed and residual use grows another 100 million bushels, and exports move up 100 million bushels (as a result of reduced Chinese exports), there could be a market for 11.125 billion bushels of US corn during the 2005-06 marketing year.<\/p>\n
“With stocks at the beginning of the 2005-06 marketing year at 1.8 billion bushels, the 2005 crop would have to be near 10.325 billion bushels to maintain 2005-06 marketing year ending stocks at one billion bushels,” he says.<\/p>\n
Doesn’t expect large increase in corn acreage in 2005<\/b><\/p>\n
“Corn acreage might continue to expand in 2005, even with significant increases in p roduction costs, due to high average yields experienced the past two years. A large increase, however, would not be expected,” Good said. <\/p>\n
If harvested acreage is near 74 million in 2005, the national average yield would need to be near 140 bushels to produce a crop of 10.325 billion bushels. <\/p>\n
“Prior to this year, expecting a yield near 140 might have been too optimistic,” Good says. “Now, a yield of 140 seems to be a modest expectation. <\/p>\n
“However, as recently as 2002, the national average yield was ‘only’ 129.3 bushels. At 129 bushels, the 2005 crop might be near 9.55 billion bushels and use during the 2005-06 marketing year would be limited to about 10.5 billion bushels.”<\/p>\n