The Renewable Fuels Association says USDA's Prospective Plantings report clearly shows that American farmers respond to signals from the marketplace. RFA says there is every expectation that farmers will once again produce the corn that is needed to meet all demands. And, they are doing it on the same number of acres they always have.
According to RFA, corn yields would need to average 159.7 bushels per acre to maintain carry-out levels from USDA's March supply and demand report. To increase carry-out stocks to near one billion bushels, an average yield of 163.5 bushels per acre would be needed. RFA believes such a yield is entirely possible and in line with trend yield growth from the last 15 years.
As for the tight supply situation, 6.52 billion bushels of corn had speculators sending corn prices up the 30-cent daily limit. RFA expects this activity will likely lead to more bogus claims that U.S. ethanol production is somehow raising the price of food and starving people around the world. As is the case with land use concerns, the food price angst directed at ethanol is misplaced. U.S. ethanol production uses just 3 percent of the world's grain supply and none of its food grains like wheat and rice.
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