BLOOMINGTON – The new ag economist for the University of Illinois sees hope in the ethanol industry.
“We’ve seen very impressive ethanol production,” Todd Hubbs told those attending the 93rd annual meeting of the Pioneer FBFM Association in Bloomington.
Despite a strong demand, we continue to build stocks. Hubbs sees a lot of corn directly competing with us in the global marketplace but feels ethanol has been a bright spot for the past decade and continues to be this year.
“They’ve raised the corn use for ethanol multiple times since September,” Hubbs explained. “Our consumption has been good.”
Some favorable factors for the corn industry include: lower corn prices, good ethanol exports and an increased demand for gasoline. Brazil is importing ethanol because sugar prices are good, but China is not.
“I believe Canada will pick up some of China’s slack,” said Hubbs.
This country has been producing slightly over a million barrels of ethanol per day. USDA has corn use for ethanol at 5.4 billion bushels this year which Hubbs refers to as “a distinct possibility which looks really promising.”
Hubbs does not believe we are in a low stock scenario with corn or soybeans. Consumption levels are decent but there is not much in the way of growth. Hubbs believes Americans driving more and using more gas will continue to be good for agriculture. How much corn we produce in 2017 will be a major factor moving forward.
The world currently has plenty of soybeans and Brazil is putting out a record crop. Prices could be significantly impacted moving forward as huge ending stocks are a possibility.
Hubbs specializes in commodity market analysis. He studied at Purdue University and provides outlooks for corn, soybeans, hogs and cattle. Hubbs replaces U of I’s Darrel Good who recently retired.