Ethanol Exerting More Pressure
on Feed Supply and Price
by Troy Smith for Angus Productions Inc.
"We expect ethanol producers to use about 5 billion bushels of corn this year," stated Mike Murphy.
DENVER (Feb. 4, 2011) — According to Cattle-Fax Market Analyst Mike Murphy, ethanol production promises to be an even bigger influence on the price livestock feeders pay for corn. Murphy offered projections for grain production and prices during the Cattle-Fax Outlook Seminar at the 2011 Cattle Industry Convention in Denver. He expects 92 million U.S. acres to be planted to corn this year and, with average yields, they should produce about 14 billion bushels (bu.). Ethanol production, said Murphy, is expected to claim a bigger portion of the pile.
According to the analyst, the Environmental Protection Agency (EPA) has granted an E15 fuel (15% ethanol by volume) waiver for model year 2001 and newer passenger vehicles, including passenger cars, sport utility vehicles and light trucks, which will support ethanol usage longer term.
“We expect ethanol producers to use about 5 billion bushels of corn this year,” stated Murphy. “And we may see a shift to more corn usage for ethanol production than is used for feed within the next several years.”
Murphy says corn stocks-to-use levels remain tight, at just over 5%, but are improving. Levels can be expected to reach 7%-11% for the 2011-2012 marketing year. Murphy looks for 2011 grain prices to be very seasonal, with spot corn prices averaging near $5.25 per bu. However, volatility has intensified in nearly all commodity markets.
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