Renewable Fuels Association President Bob Dinneen believes the February USDA World Agriculture Supply and Demand Estimate report, released Wednesday, will add fuel to the speculative fire, likely pushing prices for corn and other commodities higher. He warned that many will use strong ethanol demand as the rationale to drive the price of corn futures as high as the market will bear. In turn, this will likely cause ill-informed industries and talking heads to pronounce U.S. ethanol production as the root cause of food inflation the world over.
For U.S. corn supplies, USDA lowered its forecast of marketing year ending stocks to 675 million bushels, down 70 million bushels from the January estimate. The change comes from slight increases in the estimates of corn for ethanol use and sweetener/starch use. Globally, USDA is estimating a slightly smaller grain supply than last year's record amount of more than 2.7 billion metric tons. The 2010/11 global supply of grain is less than 1% smaller than last year's record.
Dinneen says time and again American farmers have answered the call for more grain from roughly the same amount of land. There is no reason to believe the 2011 planting and growing season will be any different.
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