Large Ethanol Demand Cut Unlikely To Repeat

CattleNetwork
12/11/2008 3:05:00 PM

CHICAGO (Dow Jones)--Thursday's supply and demand report might not be the last time the U.S. Department of Agriculture slices projected ethanol demand, but it was likely the last big cut, at least for a while, analysts said.

The USDA, in its monthly world supply and demand report, lowered its forecast for corn usage by the ethanol sector to 3.7 billion bushels, a 300-million-bushel drop from its November forecast. It said prospects for blending above federally mandated levels will decline.

The industry has been plagued by widespread financial problems and falling gasoline prices that have led to bankruptcy in some cases, such as VeraSun, the largest ethanol producer. The government noted that the industry's financial problems are reducing plant capacity utilization and delaying plant openings.

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