US lowers yearly ethanol production outlook by 3%


WASHINGTON -- Drought conditions continue to wither corn harvests throughout the Midwest, moving US officials on Tuesday to lower 2012 ethanol production forecasts by more than 3%.

The Energy Information Administration said it reduced ethanol production estimates from 900,000 bpd to 870,000 bpd, a reduction of 3.3%.

The agency says it expects ethanol production to recover in the second half of 2013.

As corn prices increase, several US lawmakers have urged the Environmental Protection Agency to ease a federal requirement for ethanol use in gasoline, known as the renewable fuel standard.

In a letter to EPA Administrator Lisa Jackson last week, more than 150 House lawmakers said the renewable fuel standard creates competition for corn, hiking up prices and hurting cattle ranchers and food manufacturers.

Livestock and poultry producers have called for a waiver of the renewable fuel standard in light of the drought.

Ethanol producers are rejecting calls for relaxing the renewable fuels standard.

In a statement last week, Growth Energy CEO Tom Buis said it is “irresponsible to blame ethanol for a lack of rain.” Buis said the market will adjust to changing conditions.

“We have never run out of corn and this year will be no different,” he said.

In addition to lowering 2012 forecasts, the EIA said ethanol production fell from 920,000 bpd for the week ending June 8 to 809,000 bpd for the week ending July 27.

Dow Jones Newswires

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