WASHINGTON - The booming ethanol industry will consume 20 percent of this year's US corn crop, the government forecast on Friday, and soy-based biodiesel also is taking off.
Biofuels will bolster corn and soybean prices, the Agriculture Department said in its first look at this year's crop harvest. Voracious demand for corn from ethanol makers will help cut the corn (maize) surplus in half by fall 2007, or 1.14 billion bushels.
"Renewable energy is making a difference" in the corn and soybean markets, said USDA chief economist Keith Collins.
Some 2.15 billion bushels (54 million tonnes) of this year's corn crop was projected to go to ethanol plants, up 34 percent from the 1.6 billion bushels (40.6 million tonnes) now being used yearly.
USDA projected 2.3 billion lbs (1 billion kg) of soyoil would be used in biodiesel in the year beginning Sept. 1, up 1.1 billion lbs (500 million kg) from this year.
"We may get US$3 (a bushel) corn on the farm this year," said private consultant John Schnittker, because of ethanol and a big demand for exports. It has been a decade since the season-average farmgate price was that high.
Corn and wheat futures prices shot upward at the Chicago Board of Trade, based on USDA's forecasts of smaller crops than last year and tightening supplies. At mid-day, corn for July delivery sold for US$2.57-1/2, up 10-1/4 cents a bushel. July wheat was up 11-1/2 cents, to US$4.03-1/2 a bushel. July soybeans were US$6.13-1/2, up one-half cent.
There are nearly 97 ethanol plants in the United States with a capacity of 4.5 billion gallons (17 billion liters) a year. There are 44 projects under way that will add 1.4 billion gallons of capacity this year, says an industry trade group. Production in 2005 totaled 3.9 billion gallons (14.8 billion liters).
"We believe that by early 2007, we're going to be producing at a rate of 6.5 billion gallons (24.6 billion liters) a year," said Collins, requiring 2.15 billion bushels of corn.
Based on surveys of 14,800 wheat farmers and examination of wheat fields, USDA forecast a winter wheat crop of 1.323 billion bushels (35 million tonnes), down 12 percent from last year and the smallest crop since 2002 due to drought in the southern Plains.
Hard red winter wheat, the major flour class, would total 715 million bushels (19.5 million tonnes), down 23 percent from 2005 and smallest since 2002. Schnittker said tight supplies would boost prices.
With the planting season well under way, USDA projected a corn crop of 10.550 billion bushels (268 million tonnes), soybeans at a near-record 3.080 billion bushels (84 million tonnes), an overall wheat harvest of 1.873 billion bushels (51 million tonnes) and a cotton crop of 20.70 million bales weighing 480 lbs (218 kg).
The soybean stockpile would climb to a record 650 million bushels (17.7 million tonnes) by Sept. 1, 2007, despite near-record exports.
Kansas, the No. 1 winter wheat state, was forecast to reap 319.6 million bushels, compared to 380 million bushels last year. Texas will harvest 35 million bushels, one-third of last year's crop, due to drought. Oklahoma was forecast for 68.2 million bushels, half of last year.
Story by Charles Abbott
REUTERS NEWS SERVICE
