Issues With Corn As Food Vs Fuel In 2011?


Corn production and demand are coming together to increase corn prices. This is great for corn growers but not great for those that depend on corn for animal feed. Adding ethanol into the mix again put corn in the middle of the food versus fuel debate.

Ethanol is consuming corn at a rate that is only 10 percent less than that of livestock and poultry demand. And more than one bushel of corn out of three produced in the US will be converted to ethanol in the current marketing year. That is going to cause concern about the amount of corn we will produce and whether it will be enough to meet demand with minimal rationing. And that causes concern for the traders.

Dr. Robert Wisner, University Professor Emeritus at Iowa State University, states "Corn supplies will be tight and some rationing of demand likely will be needed in the year ahead." This is not a great situation for those in animal agriculture without hedges and other risk mitigation actions in play.

The relatively poor quality of the 2009 corn crop caused greater than expected use by livestock feeders, and with other global issues, additional demands are being placed on the US ability to produce enough for its own needs. Livestock demand will not grow significantly because of the cost of feed, and ethanol profitability will be an issue for that industry faced with buying $5+ corn.