Ethanol manufacturers were averaging a profit of 23 cents per gallon as of June 13, a margin or incentive that is sufficient without the tax credit to cause ethanol manufacturers to produce essentially the quantities now coming to market, Dr. Jerry Bange, chairman of USDA’s World Agricultural Outlook Board, told the NCC Board of Directors last week. Bange explained that with the Volumetric Ethanol Excise Tax Credit (VEETC) of 45 cents per gallon, ethanol manufacturers were receiving an average profit of 68 cents per gallon. The cost of producing ethanol was $2.77 per gallon, and the rack price of reformulate gasoline blend stock was about $3.00 per gallon, providing the 23 cents per gallon profit spread.
Bange also said that this year’s corn harvest could be higher or lower than USDA’s current forecast. Late planting of corn does not necessarily result in lower yields or reduced production in the fall. He noted that in mid-May 2009 only 50 percent of the corn was planted and the July average temperature was 70.0°F. Yield that year was 164.7 bushels of corn per acre, 7.7 bushels per acre above the 1990-2010 trend line. In 2010, on the other hand, 92 percent of the corn had been planted by mid May but the average July temperature was 76.8°F. The final yield for corn last year was 152.8 bushels per acre, 6.6 bushels per acre below the 1990-2010 trend line. Looking at 2011, Bange noted that 66 percent of the corn had been planted by mid May and the average temperature in July is predicted to be 74.6°F. USDA expects corn yield this fall to be 158.7 bushels per acre, 3.0 bushels per acre below the 1990-2010 trend line yield. Bange advised the NCC directors to take note of USDA’s planted acreage report on June 30 and to follow the temperature in the corn belt during July.
Bange’s PowerPoint presentation is available at USDA’s Web site at www.usda.gov/oce/speeches/index.htm. USDA’s “Crop Progress” for June 13 reported that as of June 12, 99 percent of the corn had been planted compared with 100 percent for the same week a year ago and 99 percent for the 2006-2010 average. In addition, as of June 12, 91 percent for the corn had emerged compared with 97 percent a year earlier and 96 percent for the 2006-2010 average.
