What is in this article?:
• Strong demand for corn for ethanol production and continued good demand for livestock feed are driving forces.
• Corn has been planted throughout the Southeast this spring and early reports indicate stands are good from the Florida Panhandle to northern Virginia.
• In 2011, corn growers are going to want to grow as much as they can, but they need to remember some lessons from both recent and past history.
Determine ethanol profitability
“The other determining factor is oil prices. These prices will determine overall ethanol profitability. The price of the end product will dictate how much ethanol producers can spend on corn for stock, water and all other costs,” Dummler says.
Going into the 2011 growing season, the ethanol industry, especially in the U.S. appears to be on a winning streak.
In the first quarter of 2011, the EPA just announced a decision that allows for the expanded use of E15 gasoline (gasoline blended with up to 15 percent ethanol). With this ruling, the EPA has effectively expanded the size of the market for ethanol blended gasoline by allowing the use of E15 in cars manufactured after 2001.
The Energy Information Agency (EIA) released their latest estimates of ethanol production noting ethanol production was up to 922,000 barrels per day for the week ending Jan. 21, 2011. This is a new all time high and a sharp increase over the averages from 2010. According to many industry experts, ethanol production at 2011 levels puts U.S. production very near maximum capacity. Most ethanol plants are running full out and much of the commercially viable idle capacity that dates back to 2008 is back on line.
The only potential bump in the road for ethanol production in the U.S. is that ethanol inventories were up at the first of the year by 13 percent. Subsequent increases in gasoline prices have quickly reduced inventories back to near 2010 levels.
A quick drive across the Carolina back-roads is a clear indicator that corn isn’t going away from the Southeast landscape. It may not be the juggernaut crop cotton is expected to be in 2011, but stable prices and soil-building qualities are keeping corn high on the profitability list for Southeastern farmers.