US ethanol's corn limit may create grain stocks problem - researcher

15 June 2010 23:10  [Source: ICIS news]

ST LOUIS, Missouri (ICIS news)--Rising crop yields achieved by US corn farmers could be creating a future stockpile issue if the ethanol industry cannot continue to expand its consumption, an Iowa State University researcher said on Tuesday.

The US ethanol industry's appetite for corn has already swelled to 4.7bn bushels, representing 35% of this year's expected production of 13.4bn bushels, according to the latest data from the US Department of Agriculture.

Even so, the season-ending stocks for corn had been stable over the past few years, indicating that there was plenty of corn available for all market sectors, said Charles Hurburgh, a professor in the agriculture and bio-systems engineering programme at the university.

"We are not running out of corn," Hurburgh told the annual Fuel Ethanol Workshop in St Louis, Missouri. "The data does not support [the argument]."

The volumes of corn being consumed by non-ethanol market sectors had been fairly flat for the last 10 years, even as ethanol's consumption of the grain had soared, he noted.

Yield gains of 400m-500m bushels were expected in each of the next few years, so corn production was growing at a faster rate than tradition non-biofuel uses could absorb, Hurburgh said.

"If we do not allow ethanol to keep growing, there will be a big surplus," he warned.

Building the logistical means to cope with the projected excess grain, such as concrete silos, could cost $60bn (49bn) over the next 25 years, Hurburgh said.

Future growth on corn consumption by the ethanol industry was in doubt because production of the biofuel had already saturated the domestic market due to the 10% limit on blending in gasoline.

($1 = €0.82)

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By: Stephen Burns
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