On March 31st, the USDA released its crop estimates for the year. Included was an estimate that acres planted with corn were going to drop 8% from the 2007. Even with the reduction in acreage the overall crop yield should be about the same as 2007 which was 13.1 billion bushels.
So we’ve got lots of corn, that’s good news.
Here’s the bad news.
in 2007, approximately 6.5 billion gallons of ethanol was produced. The 2007 Energy Security Act requires that 9.0 billion gallons of ethanol be produced in 2008. 2.8 gallons of ethanol come from each bushel of corn. That means that nearly 1 billion additional bushels of corn will be required just for ethanol production this year.
What do you think will happen to food prices when overall corn production is flat but corn demand for ethanol increases by nearly 50%? They sure as heck aren’t going down!
In a recent Rasmussen poll, 54% of Americans finally understand that burning food is hurting their pocketbook.
Maybe we aren’t a nation of sheeple afterall.
