World Ag Demand Remains Strong

CHICAGO - Mar 6/07 - SNS -- International markets saw a good improvement in trading activity overnight. At the same time, ethanol production in the United States continues to grow, adding to the pressure on available supplies of corn and other feed stocks used by the bio-fuel industry.

Ethanol production in the United States in December measured 356,000 barrels per day, which was up from 343,000 bpd, or +3.8%, in the previous month and up from 275,000 barrels per day, or +27.14%, in the same month last year. Total ethanol production stood at 11.023 million barrels compared to 10.279 million barrels the previous month and vs. 8.676 million barrels last December.

Total production for the first 4 months of the 2006-07 season reached 41.6 million barrels, note analysts at the Chicago Board of Trade. "In order to reach the USDA corn for fuel ethanol projection, we need ethanol production to average 12.7 million barrels per month. Total US ethanol stocks stood at 8.7 million barrels in December vs. 9.2 million barrels the previous month which suggests that new record high production is not enough to meet demand.

"The head of the US Energy Information Administration suggested this week that that the rush to build new ethanol capacity in the past few years has led to a point where capacity will be greater than demand needed for blending with gasoline. US production of ethanol reached 4.9 billion gallons last year and another 78 ethanol plants on the books for 2007 and beyond is expected to pull capacity to near 8 billion gallons."

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