USDA Sees Ethanol Industry Consuming More Corn Than Expected

The U.S. is producing more ethanol than expected and, as a result, the industry is buying up more corn to make the fuel, the U.S. Department of Agriculture said Thursday.

The USDA raised its forecasts for corn-usage by ethanol producers in both the 2009-10 and 2010-11 corn marketing years. The 2010-11 corn marketing year begins Sept. 1.

The ethanol industry is now expected to consume 4.55 billion bushels of corn in the current 2009-10 marketing year, up from last month's prediction of 4.4 billion. The forecast for ethanol corn consumption in the 2010-11 marketing year was raised Thursday to 4.7 billion bushels, up from 4.6 billion.

The increases, the USDA said in its monthly World Agricultural Supply and Demand Estimates report, reflect "the continued record pace of ethanol production.

"With more corn now expected to go to ethanol for the current marketing year, beginning stocks for 2010-11 will total just 1.603 billion bushels, down from the May forecast of 1.738 billion bushels.

The increased forecast for ethanol usage in 2010-11, combined with higher expectations for food, seed and industrial usage, led the USDA to lower its forecast for 2010-11 corn ending stocks to 1.573 billion bushels, down from the May prediction of 1.818 billion bushels.

Source: CME Group