Biofuels `Food Shock' Hits U.S. and World Grain Estimates
May 12, 2007 (EIRNS)Data in the U.S. "World Agricultural Supply and Demand Estimates" report, released May 11 by the U.S. Department of Agriculture (USDA), indicate the worsening "food shock" impact of increased use of agriculture capacity for bio-energy. For example, in the United States, for the first time ever, the coming crop year is set to see more U.S. corn used for ethanol than go into exports. The USDA estimates that corn production for 2007 could be 12.46 billion bushels, and 27% of that, or 3.46 billion bushels will go into ethanol, while 19% (1.974 billion bushels) will go into exports. Though rough estimates, since Spring planting is still underway in North America, the trend is clear. U.S. soybean production this year is expected to drop 14%, given the switch over to corn plantings in some areas, and other factors. Moreover, given the increase in soybeans going into biodiesel, the USDA projects that the U.S. ending stocks for soybeans at the close of the 2007 crop year, will drop by nearly half, from the last period, falling from 610 million bushels down to 320 million bushels. Thus, there is a marked decline in the reserve potential for the food chain. For worldwide grain ending stocks for 2007/2008 crop year, the USDA sees a continuing decline from already low levels of 390.14 million metric tons (2005/2006), down to 319.79 mmt (2006/2007 estimated), falling to 305.08 mmt (2007/2008 projected). The May 11 WASDE is the first such crop projection of the year by the USDA, which in July, releases such reports monthly.