Think tank sees US ethanol output slump in 2012/13

WASHINGTON, March 8 Fri Mar 8, 2013 1:21pm EST

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WASHINGTON, March 8 (Reuters) - U.S. ethanol makers will produce 12.6 billion gallons of ethanol this marketing year, well below the federal target for use of the renewable fuel, because of high corn prices due to drought, said the influential think tank Food and Agricultural Policy Research Institute on Friday.

"Production recovers in 2013/14 because of lower corn prices and the need to meet RFS2 (federal biofuel use) mandates," said FAPRI in an annual report on the U.S. farm sector. It projected output of 14.6 billion gallons in the new marketing year.

Cellulosic biofuel production volumes are "uncertain," FAPRI said, and its projections were well below the federal mandate. It pegged cellulosic ethanol output at 9 million gallons in the marketing year that ends on Aug 31 and 21 million in 2013/14.

Biodiesel production was forecast to rise steadily in the near term, thanks to the federal requirement to use biofuels, said FAPRI. Its projections assumed the Environmental Protection Agency sets the biodiesel mandate at 1.28 billion gallons a year from 2013.

An Energy Department report this week indicated U.S. ethanol production of 12.3 billion gallons during 2013, compared to the mandate of 13.8 billion gallons. Analysts say producers will claim credit for exceeding the mandate in the past to offset a shortfall this year.

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