U.S. ethanol production has increased rapidly since 2006,
reaching about 13.95 billion gallons in 2011 (Table 1). The
increase was driven by a combination of high crude oil prices ,
federal Renewable Fuel Standards (RFS) for domestic renewable
fuel consumption, a generous tax credit for ethanol blenders,
and large net exports in 2010 and 2011. The expansion in
domestic ethanol production has been one of the main drivers of
the corn market since 2006, as corn is the primary feedstock for
ethanol production in the U.S. The USDA estimates that corn
processed for ethanol production totaled 5.021 billion bushels
in the 2010-11 marketing year and projects use at 5 billion
bushels for the current marketing year. Accounting for co-
product production, net corn consumption for ethanol production
in 2011-12 will be near 3.35 billion bushels, or about 26% of
total expected consumption. The rise in ethanol production has
recently run up against what is known as the "blend wall."
Domestic ethanol consumption is almost enti