Legislation passed in December requires 9 billion gallons of ethanol to be blended into gasoline this year. Perry asked the EPA to drop the Renewable Fuels Standard requirement to 4.5 billion gallons, claiming demand for ethanol was raising corn prices for livestock producers and driving up food prices.
Perry characterized the EPA ruling as "a mistake." But Senator Charles Grassley of Iowa called the decision a "victory," and said it will allow farmers to "continue to meet the fuel and food needs of the future."
Just how much corn will be harvested this year won't be known until next week when the Agriculture Department releases a much-anticipated crop production report. But that didn't stop private analysts from gazing into the crystal ball this week.
Informa Economics is expecting USDA to call the corn crop at 12.33 billion bushels while FC Stone puts the number at a lower 12.2 billion bushels. If Informa is correct, half-a-billion bushels over and above the government's July prediction of 11.7 billion bushels will be harvested making 2008 one of the largest harvests on record.
Soybean crop predictions fell on either side of the recent USDA forecast of 3 billion bushels. Informa pegged the number at just over 3 billion bushels and FC Stone was just under at 2.9 billion bushels.
Last month, USDA predicted a spring wheat crop of 507 million bushels. FC Stone did not make a prediction but Informa's calculations expect 522 million bushels to go into the bin. Government projections for the entire U.S. wheat crop in the last report had the total at 2.5 billion bushels.
The August 12th USDA report will be the first to contain hard data on the effect of June's catastrophic flooding on Midwestern farm fields. The combination of private estimates and the expectation of a special acreage survey in next week's report kept the bears awake. With little else to support prices the bulls continue to stay away as prices moved sharply lower.