Transcript U.S. Corn Food and Industrial Use - bioenergybaltic

United States Biofuels Industry
Biomass and Bioenergy 2008
Tallinn, Estonia, February 27, 2008
Sponsored by the Estonian Ministry of
Agriculture
Kathryn Snipes
Foreign Agricultural Service
U.S. Department of Agriculture
Why Biofuels are important to the
U.S.:
Renewable energy can:
 Reduce dependence on fossil fuels
 Diversify U.S. energy supply
 Improve U.S. economic security and
environment
 Generate income for rural areas
Drivers of Consumption

High petroleum prices

Mandates


Energy Policy Act of 2005
President Bush’s “Twenty in Ten” Proposal


New Energy Bill—January 2008


Increase alternative fuel use to 36 billion gallons or more than 136
billion liters by 2022
Environmental Benefits



Reduce U.S. motor fuel consumption by 20 percent in 10 years
Ethanol is replacing other fuel substitute (MTBE)
EPA’s low-sulfur diesel requirements
Tax Incentives

A driver for ethanol, but especially biodiesel
U.S. Biofuels Production
Billion gallons
14
Ethanol
Biodiesel
Mandate-2005
12
10
8
6
4
2
0
1980/01
1985/06
1990/91
1995/96
Source: USDA Long Term Baseline Projections February, 2007
2000/01
2005/06
2010/11
U.S. Ethanol Production Capacity
Billion gallons
Annual Capacity Shown by Month
14
12
10
8
6
4
2
0
Sep-06
Mar-07
Source: Renewable Fuels Association and USDA.
Sep-07
Mar-08
Sep-08
U.S. Corn Used for Ethanol
Billion bushels
Ethanol corn use
Ethanol share of corn use
4.5
Percent
35
4.0
30
3.5
25
3.0
2.5
20
2.0
15
1.5
10
1.0
5
0.5
0.0
1995/96
1998/99
2001/02
2004/05
2007/08F
0
2010/11F
Note: 2006/07 through 2010/11 are projections from the September 12, 2007, World Agricultural Supply and Demand Estimates report and the
February 2007 USDA Agricultural Projections to 2016.
U.S. Season Average Farm Price
for Corn (1995/96 through 2010/11F)
MMT
$/MT
160
60
140
50
Ending stocks
Average Farm Price
120
40
100
30
80
60
20
40
10
20
0
0
1995/96
1998/99
2001/02
2004/05
2007/08F
Note: 2006/07 through 2010/11 are projected based on the February 2007 USDA Agricultural Projections to 2016.
2010/11F
U.S. Corn Exports Remain Strong as
Ethanol and Corn Production Grow
400
350
300
200
150
100
50
Corn production
Exports
20
10
F
20
08
F
20
09
F
20
06
20
07
F
20
05
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
0
19
95
MMT
250
Corn use for ethanol
Impact of Higher Corn Prices on
Corn/Soybean Acres
Corn
Mil. ha
Soy
40
38
36
34
32
30
28
26
24
22
20
1990
1992
Source: USDA
1994
1996
1998
2000
2002
2004
2006
2008F
2010F
U.S. Biodiesel Production Capacity
Billion gallons
4.0
Existing Capacity
Expansion/ Under Construction
3.5
3.22
3.0
2.56
1.37
2.5
2.0
1.5
1.11
Forecast
2007/08
production
1.70
1.0
0.71
0.5
0.0
0.40
0.86
1.85
May 2006
January 2007
September 2007
U.S. Soybean Oil Used for Biodiesel
Million gallons
Biodiesel production
800
Biodiesel share of soybean oil use Percent
25
700
20
600
500
15
400
10
300
200
5
100
0
0
2000/01
2002/03
2004/05
2006/07
2008/09F
2010/11F
Note: 2006/07 through 2010/11 are projections from the September 12, 2007, World Agricultural Supply and Demand Estimates report and the
February 2007 USDA Agricultural Projections to 2016.
U.S. Biodiesel Observations

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The biodiesel industry in the United States is in
its infancy.
If the global biodiesel sector does expands, it
will transform supply and demand for oilseeds
and oilseed products.
Success of the biodiesel industry could make
competition for acreage more interesting in
corn-soybean-rotating countries.
Will U.S. Ethanol Continue To Expand?

How will the U.S. gasoline market absorb growing supplies of
ethanol? At what price level will this occur?

Will lower margins slow ethanol construction or lower utilization
rates?

Will oil companies invest in blending infrastructure soon enough to
accommodate the increase in ethanol capacity?

How will the new Energy Mandate 36 billion gallons by 2022, but
only 40 percent from corn ethanol help/limit ethanol growth (still
double current production)?
Will Biofuels Use Be Sustained?

Several trends are emerging:
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Sustained higher fuel prices are positive for biofuels
 Global petroleum consumption continues to increase
 Petroleum depletion rates are accelerating
 Access to petroleum supplies are increasingly hampered
Higher commodity prices pressures biofuel margins
 Ethanol economics are more favorable, even with higher
commodity prices
 Biodiesel is struggling so far
Use/retail infrastructure lagging behind production
What Does This Mean for Agriculture?


The rapid growth of biofuels production has
stimulated a food-versus-fuel debate.
Global agricultural producers are responding
to the growing demand for biofuels and the
growing demand for food.


Growth in demand will boost crop prices over the
next decade.
Producers will respond by increasing production.
Example of U.S. Biofuels
Cooperation with Other Countries

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The United States supports rising world
bioenergy production and consumption.
We want to engage internationally to:



Advance next generation technology
Promote feasibility of biofuels in other
countries
Expand international marketplace