USDA overestimates corn-to-ethanol use: trade group

WASHINGTON (Reuters) - U.S. ethanol refiners are unlikely to use as much corn in the coming year as the government estimates due to weak margins and high corn prices, a trade group said on Friday.

U.S. ethanol refiners probably will consume 3.8 billion bushels of corn in the next 12 months to make the alternative motor fuel, compared with the Agriculture Department estimate of 4.1 billion bushels, or a third of the 2008 corn crop. The 2008/09 marketing year opened on September 1.

"We think probably based on internal numbers ... somewhere in the 3.8 billion (bushel) range," said Matt Hartwig of the Renewable Fuels Association.

"It seems USDA is likely overestimating the amount of corn that will be consumed for ethanol production in 2008/09," RFA said in a statement.

RFA said 4.1 billion bushels of corn would yield 11.3 billion gallons. Lower ethanol output is likely, it said, in light of "current market dynamics" and the federal Renewable Fuels Standard, which requires the use of 10.5 billion gallons of ethanol during 2009.

At a yield of 2.8 gallons of ethanol per bushel, 3.8 billion bushels of corn would produce 10.6 billion gallons.

U.S. ethanol production is forecast for 9 billion gallons this year, equal to the federal mandate, said RFA. There are 170 ethanol plants with annual capacity of 10.1 billion gallons with construction under way for an additional 3.6 billion gallons.

(Reporting by Charles Abbott; Editing by Marguerita Choy)