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Will a reduced RFS really hurt demand for corn?

The Renewable Fuels Standard for corn-based ethanol has been a very important driver in the increased demand for corn.

At least that was the case, Purdue Extension ag economist Chris Hurt says, until the 2010 crop.  “There we reached about 5 billion bushels of corn and basically we’ve been about that level in the ’11 crop, the ’12 crop was the drought crop so we weren’t able to use quite that much,” he says.  “For the 2013 crop the USDA has estimated 4.9 billion bushels for corn use.”

Even though EPA has proposed a reduction in the RFS, national corn use for ethanol may not drop below the 4.9 billion bushel estimate from USDA.  “It looks like we’ll use about 132 billion gallons of gasoline next year, 10 percent of that coming from ethanol,” he says.  “The second thing we have is it looks like exports will do fairly well this year and imports of ethanol are going to be down, or near zero.”

When you put those two figures together, the 10 percent blend of ethanol (which accounts for 4.85 billion bushels of corn) and 150- 200 million bushels used for exports of ethanol, Hurt says that gets us back to the USDA number of 5 billion bushels of corn used for ethanol.

And that means USDA, he says, should NOT lower their corn usage for ethanol number.