For ethanol, USDA projects increases in corn-based ethanol production to slow over the next few years, but ethanol demand is expected to remain high and affect the production, use, and prices of farm commodities throughout the sector.
According to the report, “continued increases are projected for corn used to produce ethanol over the next 10 years, although the pace slows from the rapid gains of the past several years. Projected gains after 2009/10 are largely in line with moderate expected increases in overall gasoline usage in the United States.”
The projections assume the tax credit available to blenders of ethanol and the 54-cent-per-gallon tariff on imported fuel ethanol remain in effect. By 2018, USDA predicts that ethanol production will account for about 35 percent of corn use and corn-based ethanol production will exceed 9 percent of annual gasoline consumption.