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Iowa Ag Review

Abstract

The continuing strong expansion of the ethanol industry has raised questions about the availability and price of corn over the next few years. Will Corn Belt states continue to produce enough surplus corn to meet all the traditional users in other states and in the rest of the world? Based on ethanol industry announcements, the United States could have up to 12 billion gallons of ethanol production capacity during the 2008/09 crop year. With a typical ethanol conversion rate of 2.75 gallons of ethanol per bushel of corn, 12 billion gallons of ethanol translates into 4.4 billion bushels of corn. To see how the expansion of the ethanol industry is changing the flow of corn across the United States, we have estimated state-level domestic surplus corn, which is the amount of corn remaining in a state after accounting for ethanol, livestock feed, and other processing in the state. To do that, we estimated corn usage for ethanol and livestock feed by state and combined those estimates with figures on corn processing for non-ethanol purposes from ProExporter and corn production numbers from USDA. Domestic surplus corn is corn that is either maintained in stocks or available for export to other states or countries. We estimated domestic surplus corn for 2004 and for a projection of 2008.

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