“We have taken some off of our yield potential,” said
Emerson Nafziger, extension agronomist at the University of
Illinois. “Our preference is to have it in the ground by May 1.”

Nafziger said that based on the last six years of the
university’s lab results for Illinois, the No. 2 U.S. corn
state, corn planted after May 10 in the state could see a yield
loss of 6 percent, after May 20 a 12 percent loss, and after May
31 a 20 percent loss.

Corn grown in the U.S. Midwest grain belt typically starts
pollinating in July. Plant growth and yield potential can be
reduced if plants are forced to devote energy to staying cool
during the hottest days of summer.

Farmers had planted only 28 percent of their intended acres
as of Sunday in the United States, the world’s largest producer
and exporter. The planting progress was the lowest in records
that go back to 1980, according to the U.S. Agriculture
Department.

“Most farmers would plant corn in the first few days of June
if they had a good chance to get it in in good shape. The yield
potential is high enough that you can give up 15 to 20 percent
and have a good yield on corn, and good income,” Nafziger said.

Last week USDA forecast this season’s U.S. corn yield at
158.0 bushels per acre, below a projection for 163.6 bpa in
February, but sharply higher than the last year’s
drought-reduced yield of 123.4 bpa.

Grain processors, livestock feeders, ethanol makers and
exporters are all crossing their fingers that U.S. farmers will
produce a bumper crop after last year’s devastating drought
slashed yields, with supplies forecast as the smallest in 16
years by the end of the summer.

Portions of the U.S. Corn Belt, mostly east of the
Mississippi River, saw record rainfall in April that recharged
soils depleted of moisture following last summer’s worst drought
since 1934. But cooler-than-normal temperatures left fields too
wet for planting and also slowed crop emergence in planted
fields.

“The new stuff going in now, it will be up in a week or 10
days,” said Roger Elmore, extension agronomist at Iowa State
University in the country’s top corn producing state. “It will
be very competitive and probably be higher yielding than the
stuff that was put in earlier.”

However, farmers risk yield loss if they plant in fields
that are not fully dry. Soils can become compacted, slowing root
growth.

“People are going to be pushing soil conditions more than
they should just to get things done quickly,” Elmore said.
“If a lot of guys are mudding it in, that’ll reduce yield.”

Farmers in southern Indiana are eager to begin seeding corn
to put last summer’s devastating drought behind them, but many
have been sidelined for weeks as on-and-off rains have kept
their fields too soggy for heavy planting machinery, industry
sources said.

Producers there are not yet switching their corn acres to
soybeans, which can be planted later in the spring, as this
week’s window of warm, clear weather was expected to remain open
until Thursday. But another rain system was expected to arrive
late this week.

“They’re calling for another half inch or inch of rain later
this week so, if they don’t get corn in by Thursday, I’m sure
some guys will be seriously thinking about switching,” a dealer
at a southern Indiana elevator said.

(Additional reporting by Tom Polansek in Chicago; Editing by
Peter Galloway)

Big processors such as Archer Daniels Midland Co,
Bunge Ltd and Cargill Inc that crush soybeans
and then sell meal and oil have struggled to buy beans from
farmers who refuse to sell any leftovers from last year as a
price hedge against the possible return to drought conditions.

Farmers sold their beans for as much as $17 per bushel at
harvest last autumn after the worst drought since the Dust Bowl
sapped yields. Prices are now hovering between $14 and $15 and
growers are holding out for more money.

“It’s extremely tight. We don’t have any beans bought,” said
Ronnie Edge, the marketing manager at Owensboro Grain Co, a
soybean processing plant along the Ohio River in Kentucky.

Owensboro Grain is running only one of its two soybean
extractors at the facility, Edge said, while a plant owned by
Bunge in Morristown, Indiana, is also said to be running at half
capacity. Bunge, the agribusiness company based in White Plains,
New York, earlier this month shut down a plant in Emporia,
Kansas, until the autumn harvest.

Soren Schroder, who will take over as Bunge chief executive
on June 1, warned in a conference call this week that port
congestion in Brazil could lead to lingering tightness in
soybean and corn supplies in the United States.

RECORD BASIS

Basis bids, or the amount above or below CBOT futures that
dealers are willing to pay for beans, are at their highest ever
for this time of year at most U.S. soy processors and are
approaching the all-time highs seen during the summer of 2009,
another year of historically tight supplies.

Bids typically hit their seasonal highs when supplies
dwindle in the weeks before harvest. The sharp gains so early
this year portend the likelihood of record basis levels this
summer, experts said.

Soy futures declined to a 10-month low this month at
the Chicago Board of Trade on expectations of big global
production. The downturn in futures forced dealers to boost
basis bids to make up the difference in the flat cash price.

“Cash is as hot as I have ever seen it this time of year,”
said Charlie Sernatinger, an analyst at ABN Amro in Chicago and
market veteran of 37 years.

The soy basis in Decatur, Illinois, where ADM has its
headquarters, rose to $1.10 per bushel above futures this week,
compared with just 12 cents a year ago. Bids there hit a record
of $2.15 above futures in mid-September 2009, Reuters data
shows.

Brazil is expected have a record-large crop and overtake the
United States as the world’s top soy producer. Argentine, the
top exporter of soy products meal and oil, is also gathering
their largest crop in four years.

But port delays in Brazil are as long as two months, while
Argentine farmers are holding their supplies, with domestic
financial uncertainty prompting them to save in soybeans rather
than pesos.

U.S. SOYMEAL EXPORTS NOT LETTING UP

So even as cash prices for soy plunges in South America,
foreign importers are turning to the United States, where mature
port infrastructure can allow shippers to more speedily
transport cargoes around the world.

With six months remaining in the soymeal marketing season
that ends on Sept. 30, U.S. exporters have already committed to
deliver 8.58 million tonnes of meal, while the U.S. Agriculture
Department is forecasting 8.48 million tonnes for the entire
season.

Exporters expect some buyers to cancel deals with U.S.
shippers as more supplies become available from South America,
but that has yet to happen.

Meanwhile, traders in the United States are reluctant to
offer soymeal because bean supplies are so tight after last
summer’s drought reduced yields, bringing the current stockpile
to the smallest in at least nine years.

“This is certainly unsustainable because of the bean supply,
but the trade continues to be surprised each Thursday with the
export announcement,” a soymeal export trader said.

Edge, in Kentucky, said he was hopeful of taking delivery of
soybeans from the Chicago futures market. But with cash bids so
high, little to no deliveries against futures were expected by
traders on first notice day for May contracts next week.

Still, farmers could sell some of what remains from last
year’s harvest once they sow this year’s crop. Soy plantings are
expected to begin next month in the U.S. Midwest.

“We will stay hot into the beginning of June,” the analyst
Sernatinger said. “The farmers will get comfy with their new
crop and unload.”

The government currently releases monthly export data for
so-called DDGs and the decision on weekly numbers could come
within months, said USDA spokeswoman Sally Klusaritz.

Ethanol producers and traders are divided on a weekly
release for DDGs – a more frequent dataset would provide more
visibility in the billion-dollar market, but a report showing
large volume of weekly sales could lead to a spike in prices.

Bill Day, a spokesman at leading ethanol maker Valero Energy
Corp, said the company is in favor of weekly data.

“It makes sense to Valero, as a producer of DDGs, that they
would be subject to the same kind of weekly data reporting that
other commodities are,” Day said.

The sale of DDGs, to foreign and domestic buyers, makes up
about 20 percent of the profit margin for ethanol makers such as
Valero, Archer Daniels Midland Co and POET Biorefining,
industry experts said.

“It’s make or break. Forty percent of the corn crop goes to
ethanol and a third comes out as DDGs, so that’s 13 percent of
the corn crop ending up as DDGs,” said Wally Tyner, an energy
economist at Purdue University in West Lafayette, Indiana.

“The problem with weekly numbers is that they are weekly -
you might have a lot of transactions this week, but not much
next week.”

The ethanol industry’s lobbying arm, the Renewable Fuels
Association, is opposed to a weekly dataset, according to RFA
vice president of research Geoff Cooper.

“We think it’s unnecessary,” Cooper said. “It’s one more
administrative burden and there’s no clear benefit.”

The USDA proposed weekly export data for DDGs last June,
ending a comment period in August before extending the comment
period in March until 11:59 p.m. EST (0459 GMT) on Thursday.

The agency already releases weekly exports on agriculture
products ranging from corn to soybeans to beef.

The USDA also proposed weekly pork export data at the same
time it initially proposed DDGs. The agency started releasing
pork data three weeks ago, six months after ending the comment
period.

DDGs exports in February, the most recently available
monthly data, totaled 617,894 tonnes, up 5.6 percent from
January and the largest sales since October. China is the top
export destination, followed by Mexico and Canada.

The USDA projects 32.5 million tonnes of DDGs will be
produced this year – triple the output eight years ago – all of
which will be consumed domestically or abroad. Exports are
estimated at 6.9 million tonnes, down from 7.5 million tonnes
last year and the smallest since the 2008/09 marketing season
that runs Sept. 1 to Aug. 31.

Production of the animal feed declined after ethanol plants
reduced operations when last summer’s worst drought since 1934
sent corn prices to a record high and squeezed profits.

In a rare move, wholesale prices for choice-grade beef
dipped below those of leaner but lesser-quality select cuts,
according to the U.S. Agriculture Department.

The wholesale choice beef cutout declined to $192.94 per
cwt, the lowest level since the first day of the month, while
select beef was priced at $193.21.

“We need some nice grilling weather, some spring weather
that facilitates the scraping off of backyard barbecues.
Grilling season is an important turning point (in beef demand)
and it’s certainly delayed this year,” said Jim Robb, economist
at the Livestock Marketing Information Center.

Late-winter snowfall on the East Coast and below-freezing
temperatures on the Spring Equinox in the Midwest contributed to
a slow start to the grilling season while an early Easter
holiday also limited buying during Lent, when many Christians
eat less meat.

Beef prices remain near record highs after ranchers culled
the U.S. cattle herd to the smallest in 60 years when last
summer’s devastating drought sent animal feed prices soaring.

And the high cost of beef – retail prices hit a record of
$5.24 per lb in January – may lead to more consumers grilling
chicken or pork this summer while grocery stores give more
advertising space to cuts with a better chance of selling.

Rising gasoline prices and the expiration of a payroll tax
break are also keeping a lid on U.S. discretionary spending.

Top U.S. meat company Tyson Foods Inc late last
month said margins were “compressed” this year in its beef
business.

“With cheaper pork and broiler meat around, the retailers
are likely to go away from beef. Beef is priced out,” said John
Ginzel, an analyst at brokerage The Linn Group in Chicago.

Choice beef was priced 27 cents per cwt below select and
discounted for the first time since April and only the 14th time
in history, USDA data shows.

The inversion of the choice-select spread is rare and
self-correcting because retailers snatch up the higher quality
and yet less expensive choice product.

Choice beef has more “marble,” or fat, that many cooks sear
on hot grills to lock in juicy flavor while select is leaner and
less tender.

Winter storms early this month in the southern U.S. Plains
cattle country also slowed the marketing of slaughter-ready
animals, resulting in further weight gain at feedlots. That may
have also resulted in more beef being graded as choice, the
analysts said.

Privately held POET, the country’s No. 2 ethanol maker
behind Archer Daniels Midland Co, was bidding to buy SRW
wheat, a variety grown primarily in the eastern U.S. Midwest and
typically used to make crackers and biscuits.

U.S. ethanol producers rarely use wheat to make biofuels but
the worst drought in five decades reduced last year’s corn
harvest and pushed corn prices to record highs. The U.S. ethanol
grind subsequently fell to the lowest level since the government
began releasing weekly statistics in June 2010.

The highest gasoline prices since last summer and
better profit margins at ethanol plants have led some facilities
to ramp up production in recent weeks.

However, U.S. farmers are holding tight to what remains of
last year’s corn harvest while wheat supplies are more
plentiful.

At POET’s facility in Portland, in central Indiana near the
border of Ohio, its grain buyers were bidding $7.44 per bushel
for corn and $6.85 for wheat, according to POET’s website.

The plant typically consumes 24 million bushels of corn to
produce 68 million gallons of ethanol per year, according to the
company.

POET spokesman Matt Merritt had no additional comment.

Analysts said using wheat is only a temporary solution for
ethanol plants designed for corn. Most facilities produce a
byproduct called distiller’s grains that is sold as animal feed.
Many plants also have technology to extract corn oil.

Ethanol plants can supplement corn supplies with other
feedstocks, such as wheat, before drastically altering
operations.

“They can do up to 20 percent with wheat before having to
completely shift their plant over. I have heard it is being done
in some areas depending on price and availability,” said Chris
Manns, president of Traders Group Inc.

(Additional reporting by Mark Weinraub, Sam Nelson and Karl
Plume in Chicago; Editing by Gerald E. McCormick and Bob
Burgdorfer)

Most immediate concerns center on federal meat inspectors at U.S. meat plants, who must be present by law for animal slaughter and meat processing to take place. U.S. Agriculture Secretary Tom Vilsack said the U.S. Department of Agriculture’s meat safety agency would have to furlough its 8,400 inspectors for 11 to 12 days to compile the savings required under the automatic federal budget cuts.

There are also concerns about grain inspection at ports and key jobs in transportation, such as the Army Corps of Engineers, which operates hundreds of river locks and dams for grain barge traffic.

Given the importance of the U.S. food system – food exports regularly post a huge trade surplus and food inflation is a key bellwether for government policymakers – agribusiness executives and officials said they expected the government to think carefully to minimize disruptions to food supplies.

“Even in the scenarios being discussed in the press, inspector services would not be affected for a few months,” Thomas Super, vice president of communications at the National Chicken Council said, referring to USDA meat inspectors at broiler packing plants.

“Because sequestration cuts must be spread over the next seven months, opportunity remains to resolve the budget crisis before inspectors are furloughed,” he said.

Super said NCC and about 40 other meat, poultry, food and grocery manufacturing and restaurant associations sent a letter to Vilsack underscoring their concerns about furloughing of USDA food safety inspectors due to the “sequester” automatic cuts that went into process on Friday.

USDA says no furlough notices have been issued to meat inspectors or any USDA department, but Vilsack told the U.S. House Agriculture Committee on Tuesday the agency will send furlough notices to meat inspectors this week although it will be “several months” before they occur.

Dave Warner, a spokesman for the National Pork Producers Association, said: “Meat inspection should be maintained to protect the public health by ensuring the safety of the U.S. meat supply. Should inspectors be furloughed, that action would have a huge negative impact on hog farmers, meat packers and processors, food retailers and restaurants and consumers.”

POSSIBLE PROCESSING PLANT SHUTDOWNS

By law, slaughterhouse activities cannot proceed without USDA-employed inspectors on hand. A mass layoff of inspectors would shut down nearly 6,300 meat packing and processing facilities because companies cannot ship meat that lacks the USDA inspection seal. The White House estimates the industry would lose $10 billion in production with just a two-week shutdown. Retail and wholesale meat prices would be expected to rise.

“Because meat inspection has historically been considered ‘essential’ by the federal government, we’re optimistic there will be no interruption in this public health and safety function. We do not expect any immediate impact on our business,” said spokesman Gary Mickelson of Tyson Foods, the largest U.S. meatpacker.

USDA’s Agricultural Marketing Service, which generates prices used as benchmarks for livestock futures at the CME Group Inc, and essential agribusiness needs like the federal grain inspection service are also at risk of slowdowns or shutdowns.

“I don’t believe it’s going to be an issue because there are a lot of ways within USDA to cut the budget without having to furlough meat inspectors,” said Dan Norcini, a livestock futures trader at CME. “All of these fears are overblown and quite frankly I don’t put any stock in any of that talk.”

U.S. grain export associations, lacking details on government’s furlough plans, have been mostly silent so far on how grain inspections and export trade would be affected.

But federal government workers are everywhere in the food chain, from operations of locks and dams on U.S. rivers to oversight of rail shipments to quality control of food imports for contamination from pesticides and other chemicals.

Randy Gordon, president for the National Grain and Feed Association, said his group, which includes hundreds of grain handlers, was confident that grain inspections at U.S. gateway ports including New Orleans or Portland, Oregon, would have business as usual.

“Our understanding is that sequestration’s impact on daily official grain inspection and weighing services performed by USDA’s Grain Inspection, Packers and Stockyards Administration will be minimal, as these services are financed almost exclusively through industry-paid user fees,” Gordon said, adding that NGFA is most concerned about the potential impacts to livestock operators given the group’s delivery of massive feed rations to beef, swine, poultry and fish farms.

“We’re also monitoring the impact on the Department of Homeland Security’s Customs and Border Protection agency, given the importance of these inspectors in clearing imports of feed ingredients some grain commodities, particularly containerized vessel imports,” Gordon said.

(Additional reporting by Karl Plume. Writing by Christine Stebbins; Editing by Maureen Bavdek)

Live steer and heifer prices increased $5 per cwt in the top
cattle producing state of Texas, the largest increase since
February 2012. That is expected to push wholesale beef prices
higher and could further reduce already lackluster consumer
demand for red meat.

Beef packers, caught short amid the snowfall, aggressively
hiked their bids to buy cattle. Prices in the Texas Panhandle
surged to $128 per cwt and Kansas cattle gained $3 to $127, with
cash prices overall the highest in about two months.

Retail beef prices are the highest ever, rising to $5.24 per
lb for benchmark choice cuts in January, according to the U.S.
Agriculture Department.

The highest gasoline prices since the end of last summer and
the steepest drop in consumer income in 20 years have also
pressured demand at butchers and grocery stores even as
uncertainty surrounding budget and job cuts due to the so-called
sequester keeps a lid on beef buying.

“The overall economy is looking uneasy and that’s not good
for meat demand,” said Ron Plain, an extension agriculture
economist at the University of Missouri.

Still, beef prices are underpinned by the smallest U.S.
cattle supply in 61 years after the worst drought in five
decades led to record-high animal feed prices, leading some
cattle producers to liquidate their herds.

The blizzard that dumped 20 inches of wet snow this week in
the Plains cattle country mitigated drought conditions but
stressed animals in pastures and feedlot fattening operations,
slowing weight gain. Feedlot operators also struggled to load
animals in trucks and transport them to slaughter houses.

“It was hard for the feedlots to get the animals to the
packing houses. You’re dealing with 2 feet of snow out there in
the country. That’s hard conditions to get semi’s out on country
roads,” an Iowa cattle broker said.

Meat companies, such as Tyson Foods Inc and Cargill
Inc, are likely to pass the higher cattle prices onto
consumers. Beef packers, on average, are losing $23.40 per head
of cattle they slaughter, according to the advisory service
HedgersEdge.

Plain, the economist, expects another record retail price
for beef. “I don’t think the record (in January) is going to
last for the year,” he said.

Lumber futures were headed for their biggest two-day slide
in a month after hitting a nearly eight-year peak on Monday.

CME lumber for March delivery climbed above $400 per
thousand board feet for the first time since April 2005 on
Monday before declining by as much as the $10 per tbf daily
trading limit.

Lumber futures nearly fell the trading limit again on
Tuesday before trimming losses, trading $6.90 lower at $382.90
per tbf as of 12:25 p.m. CST (1825 GMT).

“We went up way too soon,” Robin Cross, chief operating
officer at brokerage Paul Court Company, said from the trading
floor at the Chicago Mercantile Exchange.

“The market is definitely better but housing is just
grinding better. There’s some underlying confidence but we don’t
want to get ahead of ourselves,” Cross said.

Groundbreaking on new U.S. homes declined 8.5 percent in
January to an annualized rate of 890,000, below expectations of
925,000, data from the U.S. Commerce Department showed.

Quarterly results from Toll Brothers, the largest
luxury homebuilder in the country, also missed expectations,
further pressuring wood prices.

Still, single-family unit housing starts were the highest
since July 2008 while permits for building permits for new
construction also jumped to a 4-1/2 year high.

Futures had also been trading at a premium to cash, with
benchmark western spruce pine fir priced late last week at $390
per tbf, according to Random Lengths, which tracks prices and
trends in the lumber market.

“Premiums at such historically high prices are difficult to
maintain so the second we broke, we had a very bearish move that
led to some technical selling today,” Cross said.

Pork exports totaled 2.26 million tonnes, up narrowly from
2011, with the value of those sales up 4 percent at $6.3
billion, both records, according to the U.S. Meat Export
Federation, which compiles USDA data that was issued on Monday.

Beef export volume declined 12 percent to 1.13 million
tonnes. But the value of the sales jumped 2 percent to a record
$5.51 billion in a year that saw all-time highs in Chicago
Mercantile Exchange live cattle futures.

Growing global demand for meat propelled export volumes,
while record animal feed prices amid the worst U.S. drought in
five decades forced up meat values, analysts said.

“Certainly the changing consumer buying patterns throughout
the world has influenced demand,” said Rich Nelson, analyst at
Allendale Inc.

Export sales slowed in December with the beef volume down 16
percent from a year ago while the pork volume declined 14
percent.

Sale volumes should continue to the decline in 2013 due to a
smaller U.S. cattle herd and to Russia banning U.S. meat imports
containing the animal feed additive ractopamine. The additive is
used to make meat more lean.

Russia’s imports of U.S. beef rose 10 percent to a record of
80,408 tonnes in 2012, while pork imports were up 33 percent.
That was before the country’s ban that went into effect this
month. U.S. officials have urged the country to lift the ban.

However, the potential for increased sales to Japan, the No.
2 U.S. market after Canada, could limit the fallout of fewer
sales to Russia.

Japan last month announced that it will accept U.S. beef
from cattle up to 30 months old, a change from its previous
20-month age limit. The 20-month limit had been in place for a
decade as a safe guard against mad cow disease. Meat from the
older cattle was shipped to Japan last week, said Philip Seng,
president of the Meat Export Federation.

“The trade does have this mentality that exports will be
down this year… certainly with the Russia news taking
precedent. But if we see Japanese buying, we could change some
expectations,” Nelson said.

(Reporting by Michael Hirtzer in Chicago; Editing by Bob
Burgdorfer)

The request for a first-ever waiver from the federal
Environmental Protection Agency’s mandate, which in essence
requires that more than a third of the U.S. corn harvest be
converted into ethanol, comes as grain prices have surged to
record highs, driving up feed costs and squeezing profits for
producers.

“We are having trouble buying corn… it’s really putting a
burden on our operations and many others across the nation,”
says J.D. Alexander, president of the National Cattlemen’s Beef
Association, whose Nebraska feedlot is about half full of
cattle. “It’s time to wean the ethanol industry and let it stand
on its own.”

The EPA has not granted a waiver since the Renewable Fuels
Standard (RFS) was enacted in 2007. The policy has enjoyed years
of staunch bipartisan support, boosting income for U.S. farmers
and helping reduce the country’s dependence on foreign oil. But
it is now coming under renewed attack.

The beef, chicken, pork and turkey trade groups said they
had delivered a petition to EPA administrator Lisa Jackson to
waive the mandate “in whole or in substantial part” for the
remainder of this year and part of next.

Matt Hartwig, a spokesman for the Renewable Fuels
Association, said in an interview the move by the livestock
groups “is not an official waiver request — and did not trigger
EPA to begin the process.”

The only groups that can petition the EPA for a waiver are
oil refineries or blenders, a state or the EPA itself.

The request had been expected as livestock groups hit
hardest by the 60 percent rise in corn prices over the past six
weeks ramped up lobbying efforts. It is far from clear whether
they will succeed where Texas Gov. Rick Perry failed four years
ago, when he sought a partial waiver.

The groups said the mandate had proved powerful enough to
“directly affect the supply and cost of feed”, causing
sufficient harm to meet the requirement of severe economic or
environmental harm. But analysts say meeting that criteria may
be difficult to prove.

It is also unclear what kind of political reception the
request will have in Washington ahead of the November election,
in which President Barack Obama, a supporter of ethanol, seeks a
second term. Some of the most fiercely contested states are in
the farm belt, where the mandate is very popular.

“EPA officials and the secretary of agriculture (Tom
Vilsack) have all indicated that they are not considering a
waiver at this time. I am not sure if this (petition) changes
the landscape all that much,” said Mark McMinimy, biofuels
analyst at Guggenheim Partners Washington Research Group.

IF NOT NOW, WHEN?

Corn futures soared to a record of $8.28-3/4 per
bushel this month at the Chicago Board of Trade as the most
extensive drought in five decades reduced the yield potential of
the developing crop.

About 35 percent of the U.S. corn supply is now used to
produce ethanol — about the same amount that is used as animal
feed, according to the U.S. Agriculture Department.

“The whole waiver process, if not enacted now, has to be put
into question. If we are not going to do this now, in a historic
drought year, then when?” said John Burkel, vice chairman of the
National Turkey Federation and a Minnesota turkey farmer.

Two-thirds of the country is suffering from moderate to
exceptional drought.

But ethanol supporters doubt EPA will make any change to the
mandate amid ample ethanol stocks and a cushion of tradable
credits generated when a gallon of ethanol is produced — known
as renewable identification numbers (RINs) — which will keep
corn-ethanol use in check for 2012 and into 2013, they say.

Additionally, waiving the ethanol mandate would reduce
supplies of the ethanol byproduct dried distillers’ grains,
which is also used to feed animals.

“Waiving the RFS won’t bring the type of relief the
livestock groups are seeking, nor will it result in
significantly lower feed prices,” Bob Dinneen, president of the
Renewable Fuels Association, said in a statement.

“Because ethanol plants also produce a high protein feed,
limiting ethanol production will only further complicate drought
related feed issues and costs,” he added.

(Additional reporting by Christine Stebbins in Chicago.;
Editing by Dale Hudson, Bob Burgdorfer and Andrew Hay)