Shock Rise In Corn Production A Boon To Biofuel Producers

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Jim Lane

In grains, the big news has been the USDA prospective plantings report, which has corn up to 93 million acres in 2016, up 5 million over last year, and it was an unexpected gain given that stock levels of grain are high now. Big stocks plus a big planting equals even bigger ending stocks and prices have declined substantially for corn as a result, down 15 cents per bushel on the report.

The USDA report?

Officially, here’s what USDA had to say:

Corn planted area for all purposes in 2016 is estimated at 93.6 million acres, up 6 percent from last year. If realized, this will represent the highest planted acreage in the United States since 2013, and will be the third highest planted acreage in the United States since 1944.

Soybean planted area for 2016 is estimated at 82.2 million acres, down less than 1 percent from last year. Compared with last year, planted acreage intentions are down or unchanged in 23 of the 31 estimating States.

All wheat planted area for 2016 is estimated at 49.6 million acres, down 9 percent from 2015. The 2016 winter wheat planted area, at 36.2 million acres, is down 8 percent from last year and down 1 percent from the previous estimate. Of this total, about 26.2 million acres are Hard Red Winter, 6.60 million acres are Soft Red Winter, and 3.37 million acres are White Winter. Area planted to other spring wheat for 2016 is estimated at 11.3 million acres, down 14 percent from 2015. Of this total, about 10.7 million acres are Hard Red Spring wheat. The intended Durum planted area for 2016 is estimated at 2.00 million acres, up 3 percent from the previous year.

All cotton planted area for 2016 is estimated at 9.56 million acres, 11 percent above last year. Upland area is estimated at 9.35 million acres, up 11 percent from 2015. American Pima area is estimated at 215,000 acres, up 36 percent from 2015.

The impact

It’s good news for ethanol producers, however, who are seeing gasoline prices recover slightly and raw input prices in corn continuing to decline. That also means good news for biodiesel producers that have adapted their technology to utilizing inedible corn oil, which should be available in even more abundance.

Meanwhile soybean plantings were flat compared to 2016. The big change is in wheat plantings, which were down almost 5 million acres to offset the corn increases mostly in the western states like Colorado. So, the new corn is going to be somewhat more sustainable having to be transported fewer miles and chewing up less fossil carbon in the process. Also, sorghum is down substantially from 8.4 million acres to 7.2 million, dropping by more than two-thirds in Arkansas alone.

So, it’s bullish on the whole for biofuels, but not so for growers excepting those who have a secondary market for agricultural residues where some of that expected bumper crop can be put to use for cellulosic production.

The Hard Data

Prospective Plantings: The Digest’s 2016 8-Slide Guide to corn, soy, sorghum, wheat acreage

Son of Billion Ton: The Digest’s 2016 Multi-Slide Guide to the USDA Billion Ton Report

Jim Lane is editor and publisher  of Biofuels Digest where this article was originally published. Biofuels Digest is the most widely read  Biofuels daily read by 14,000+ organizations. Subscribe here.

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