The 2012 Corn Crop and the Outlook for Ethanol

Renewable Fuels Association
by Geoff Cooper
Posted on: July 16, 2012 in Agriculture, Food, Exports, Renewable Fuels Standard, USDA

Extreme hot and dry weather across much of the Midwest this summer has caused government and private analysts to significantly reduce their projections of the size of the 2012 corn crop. USDA’s latest estimate for this year’s corn crop is 12.97 billion bushels, down 12% from the agency’s earlier estimate of 14.79 billion bushels. Due to worsening drought conditions, many believe the size of the crop will be further reduced. The likelihood of a short corn crop has caused some to question how the ethanol industry and Renewable Fuel Standard (RFS) will be affected. This white paper briefly examines the potential impacts on the RFS and outlook for the ethanol industry.

What is the outlook for 2012 ethanol production?

Based on weekly ethanol production data through July 6, year-to-date ethanol production has averaged 900,900 barrels per day (bpd).[1] This implies annualized production of 13.81 billion gallons (bg). This is fairly consistent with USDA’s most recent estimates of corn usage for ethanol, which indicate corn use of 5.0 billion bushels for the 2012 calendar year (this equates to 13.75 bg using USDA’s assumption for denatured ethanol yield per bushel).[2] However, if high corn prices continue to pressure ethanol production, annual output will be somewhat lower. If ethanol production hovers around the most recent 4-week average (865,000 bpd) for the remainder of the year, total annual production would be 13.55 bg. If the most recent 2-week average (839,000 bpd) is used for the remainder of the year, total production would be 13.42 bg.

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