According to a Sept. 5 article in Newsweek, “since Trump took office, the EPA has approved 85 waivers for 4 billion gallons of renewable fuel, ending demand for 1.4 billion bushels of corn."
That is clearly a Trump administration-inflicted, domestic U.S. corn demand destruction policy, consciously caused by ethanol Renewable Fuels Standard waivers, very likely a violation of the RFS as passed by Congress and for the economic benefit of big oil refiners. This all comes at the economic expense of farmers, the ethanol industry and the rural economy.
That seriously anti-ethanol policy choice, when combined with the administration’s negative trade and export policy, shows some staggering numbers.
Accumulated U.S. corn exports, as reported as of Aug. 29, of 1.928 billion bushels, by the U.S Department of Agricultural Export Sales Report, as this corn marketing year neared its close, was about 510 million bushels below the 2.438 billion bushels of corn exports reported in the 2017-2018 marketing year according to the Aug. 12 USDA-World Agricultural Supply and Demand Estimates Report. That same report projects U.S. corn exports in the 2019-2020 marketing year to be only 2.05 billion bushels, down 100 million bushels from their July 2019 projection, if exports reach that level.
Additionally, outstanding U.S. corn export sales as of Aug. 29 were about 90 million bushels less than the same time last marketing year. Cumulatively, it’s evident that nearly 2 billion bushels of farmer, ethanol industry and export corn demand and sales were lost forever, at a time when they were desperately needed by farmers and all those industries and jobs in the rural economy that rely on farm income.
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All this lost corn demand has hung over the market and has driven corn prices down. Recent news reports have the administration touting E15 for 2020, which Newsweek reported may increase corn demand by only about 100 million bushels. Corn farmers should not be gullible enough to believe that a bump of a minor 100 million bushels of corn from E15 can make up for the massive, policy-driven level of destroyed corn demand the administration has inflicted.
The E15 increased demand is a crumb in the total picture. It is minuscule compared to the price- and income-crushing 2 billion bushels in lost corn demand.
Foreign export competitors from South America, Africa, Russia, the Ukraine and elsewhere will be the permanent beneficiaries of the administration’s wrongheaded ethanol and export trade policies.
Chinese importers have been in South America this year cultivating future export supply relationships. They are reportedly investing in crop production infrastructure in Africa as well. Accumulated U.S. soybean exports were also down about 437 million bushels from the 2017-2018 marketing year-ending export numbers, compared to the reported Aug. 29 weekly export sales levels as the 2018-2019 marketing year neared its end.
On Sept. 6, USDA reported Nebraska corn prices as low as $3.26 and soybean prices as low as $7.25 per bushel. Those low prices are the direct result of the administration’s bad ethanol and trade policies, which are unraveling demand for US corn and soybeans. It is a “market-development-in reverse” policy for U.S. farmers and an “export facilitation” program for their foreign competitors.