Outlook for Corn and Ethanol
Industrial uses of corn are expected to total 622
million bushels in 1995/96 (September/October), down 18 percent from the
previous year. Corn use for the production of industrial starch, fuel and
manufacturing alcohol will all be lower than in 1994/95, primarily due to this
year's high corn prices. In 1996/97, with a larger corn crop, industrial uses of
corn are forecast to rise six percent to 661 million bushels from this year's
depressed levels.
Corn used for ethanol production in 1995/96 is
estimated at 395 million bushels, down 26 percent from last year. Higher corn
prices have affected fuel ethanol producers, especially dry- mill operations.
With corn prices expected to stay strong and ethanol prices held down because of
competitive pressures, as of August 1996, producers are expected to keep
production low until new-crop corn is available.
In 1996/97, ethanol
production is likely to rebound and use 425 million bushels of corn, which is
still below the 1994/95 peak of 533 million bushels.
In 1995/96, corn
used for denatured manufacturing and industrial alcohol is expected to total 40
million bushels, nearly the same as the 36 million used in 1994/95.
With
high corn prices, use will likely slow, as has occurred in prior high-cost
periods. In the last half of the marketing year, use is expected to drop
significantly below a year earlier.
If corn prices decline as expected in
1996/97, corn use in manufacturing alcohol will likely hold its own against
other feedstock and chemical processes for making ethyl alcohol
(ethanol).
By Allen Baker, USDA, Economic Research Service.
