Ethanol makers are likely to need at least 5 billion bushels of corn for making the renewable fuel in the coming year despite the biofuel selling at a premium to gasoline, say economists Scott Irwin and Darrel Good of U-Illinois. “Overall, we see little risk of total ethanol use falling below 13.9 billion gallons and, consequently, corn use for ethanol of less than 5 billion bushels,” they write at farmdoc daily. “Key to our analysis is the assumption that (Renewable Fuel Standard) mandates are likely to return to statutory volumes for 2014 and beyond.” That would mean the traditional blend rate of 10 percent ethanol in a gallon of gasoline would continue.
“We also argue that the blend wall represents a cap on domestic consumption for now – regardless of the level of ethanol and gasoline prices – because of the constraints on the expansion of the use of higher ethanol blends,” say Irwin and Good. Already a year late in setting the ethanol mandate for 2014, EPA says it will complete work on the regulation early next year. Some 36 percent of this year’s record corn crop is forecast to be used in making ethanol.