Date: 13-Feb-09
Country: US
Author: Christopher Doering
WASHINGTON - U.S. corn used to produce ethanol will increase in 2009/10, but beyond that, growth is forecast to slow with demand mirroring changes in gasoline consumption, the Agriculture Department said on Thursday.
USDA projected 4.2 billion bushels of corn will be used to produce ethanol in 2009/10, an increase from 3.6 billion bushels forecasted for the current year.
Overall, ethanol is forecast to command about 33 percent of the corn crop compared to 30 percent in 2008/09.
"While expansion in the ethanol industry continues, smaller gains for corn-based ethanol are projected, largely reflecting moderate growth in overall gasoline consumption in the United States," USDA said in its annual "baseline" report.
The projection assumes a tax credit is available to ethanol blenders and a 54-cent-per-gallon tariff on imported ethanol remains.
Analysts and the trade group representing ethanol manufacturers forecast tighter operating margins and less demand as a drop in gasoline use spurs consolidation within the industry this year.
VeraSun Energy Corp, the second largest U.S. ethanol producer, filed for bankruptcy last October.
The federal government's so-called U.S. renewable fuels standard requires the use of 11.1 billion gallons of renewable fuels in 2009 with much of the output coming from corn.
In 2022, the energy law requires the U.S. gasoline supply to include 36 billion gallons of renewable fuels, 15 billion gallons from corn-based ethanol and 21 billion gallons from advanced biofuels, such as ethanol from cellulose.
(Reporting by Christopher Doering; Editing by Christian Wiessner)
© Thomson Reuters 2009 All rights reserved
