Bearish report highlights need for biofuel certainty

WASHINGTON — The surprising 1.3 million harvested corn acre jump from the November to the Jan. 12 U.S. Department of Agriculture crop production reports, combined with record quarterly stocks inventories, drew more questions than answers.

The shocker also did a number on the market, with corn futures falling from $4.46 per bushel at the close Friday, Jan. 9, down to the $4.20 range following the report’s record production estimate of 17.021 billion bushels, up 14% from 2024.

The surplus supply promises to keep corn prices low as farmers struggle to pay high input costs, according to the National Corn Growers Association.

“We need long-term market solutions, and we need them quickly, or this is going to deepen the economic crisis in the countryside,” said Jed Bower, Ohio farmer and NCGA president.

“The urgency for Congress and the president to open new markets abroad and expand consumer access to ethanol just increased exponentially.”

Bower noted that an immediate boost to demand would be the passage of legislation authorizing year-round consumer access to fuels with 15% ethanol blends.

He added his solution comes at no cost to consumers, requires no additional infrastructure developments and could use 2.4 billion additional bushels of corn annually at full implementation, according to NCGA estimates.

“NCGA continues to push the administration to quickly broker additional high-volume deals with other countries and finalize details on deals already announced,” Bower said.

Corn growers have noted that India, Vietnam and Kenya are all strategically important markets to them.

As he took in the news, Bower said that this is only the latest in a series of problems for growers.

“We expect the economic and financial challenges growers are already facing will only worsen with excess supply,” he said.

Biofuel Certainty Needed

The U.S. Environmental Protection Agency announced in mid-December plans to finalize biofuel rules governing the Renewable Fuel Standard program for 2026 and beyond in the first quarter of 2026.

The upcoming rules are critical for providing long-term certainty for agricultural markets and the energy industry and follows a period of legal uncertainty and annual delays that have plagued the RFS.

The Renewable Fuels Association said the latest USDA report underscores the pressing need to eliminate regulatory obstacles that are suppressing demand and limiting market opportunities for both corn and ethanol.

“The surprise USDA report serves as a sobering wake-up call about the state of farm economy and underscores the need for lawmakers to take immediate action to expand markets for America’s corn growers,” said RFA President and CEO Geoff Cooper.

“The fastest and easiest way to shore up the growing supply-demand imbalance in the corn market is to permanently remove the summertime barrier on E15 sales and eliminate obsolete fuel retail infrastructure rules. These decades-old regulatory barriers are literally choking off demand and shortchanging America’s farmers.”

Cooper added that expanding access to higher ethanol blends represents the most effective path to creating long-term stability in the corn market.

“Allowing E15 to be sold year-round nationwide could, over time, create new demand for more than 2 billion bushels of corn and sorghum,” he said.

“Unlocking that opportunity now would deliver much-needed economic relief to farming communities across the Heartland, while also saving consumers an estimated 10 to 30 cents per gallon at the pump.”

Arlan Suderman, StoneX chief commodities economist, said in his market outlook the EPA’s upcoming final guidelines “is going to be the single biggest factor for the biofuel program.”

Ethanol blending in the nation’s gasoline supplies reached its highest ever — topping 11% — last month, largely due to an increase in E15 sales.

“E85 is staying at a pretty flat rate, but E15 sales are increasing,” Suderman said. “When I see a station that’s got E15, because it’ll have a cheaper price to it, I buy, and I get very similar gas mileage with E15 as I do with E10. Apparently there’s enough other drivers out there who are doing that as well, and that’s why we’re seeing this blending go higher.

“That kind of puts a myth of a blending wall to rest as we look at the data. Our major ethanol export customers are Canada, Netherlands, United Kingdom, India, Columbia. Exports to Canada and Netherlands are trending higher. So, total exports are continuing to trend higher, as well.”

Another reason there’s a strong demand for ethanol exports is Brazil is building its own ethanol program.

“Brazil now has a mandated 30% ethanol blend in its gasoline. It still uses sugar cane for the bulk of its ethanol production, but increasingly it is rapidly building corn-based ethanol plants to meet the demand in Brazil,” Suderman said.

“So, as Brazil increases corn production each year by expanding its acreage, that’s not resulting in a direct one-to-one increase in exportable corn supplies because the ethanol biofuel program is absorbing more of that increased production.”