Demand for corn will soon become a major determining factor in pricing corn. After 5-7 years of driving corn demand growth, U.S. ethanol production will begin to play a more subdued role as refiners approach the mandated targets of production and the 10% blending wall. The U.S. Department of Agriculture (USDA) is predicting corn demand from the ethanol industry will be below the 5 billion bushel mark for the second year in a row after peaking in 2010-11 at 5.02 billion bushels. These results indicate that growth has leveled off in the industry after the years between 2005 and 2009 when corn used in ethanol production increased from 14% to 35%. While ethanol has had the fastest growing usage of corn, feedlots remain the largest – accounting for four out of every ten bushels consumed in 2012 or 5.1 million bushels – 600 million bushels higher than 2012. Many experts predict a surge in corn usage if the price falls enough, however considerations are not being given to the increased presence of dried distiller grains (DDGs) in feed rations meaning future corn demand may not rise as much as expected.
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