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More corn going into ethanol; ethanol exports grow in importance

A mild surprise in this week’s WASDE report from USDA was the 50 million bushel increase in the estimate of corn that will go into ethanol production this marketing year.

University of Illinois ag economist Todd Hubbs says that’s a positive sign for domestic corn use demand.

“Since we’re sort of struggling under the 2.4 billion bushel ending stocks number, any increase is some kind of benefit to maybe driving down those stocks,” Hubbs says.

Ethanol exports have been very strong over the past year. But Hubbs says Brazil’s tariff rate quota on ethanol imports has caused a slowdown in recent weeks.

“That’s going to sort of hang over exports all year, under their policy regime,” he says. “So we really need places like China and India to pick up ethanol exports for our product.

“I think it will happen. I think we’ll see those strong exports and will see this really good number for corn use this year.”

The 50 million bushel increase pushed USDA’s 2017-18 “corn for ethanol” forecast up to 5.525 billion bushels.

AUDIO: Todd Hubbs