The tightness of corn supplies is likely to heighten the backlash against the use of the grain by ethanol plants, which are for the first time in 2011-12 set to consume more of the crop in the US than livestock farmers.
Ethanol producers scored two political concessions in the last six months, the first financial, when they won the extension this year of tax perks for blenders, and a tariff hurdle against imports.
The second was an image enhancement, in winning a change of wording to US Department of Agriculture accounting of the industry, to note in its publications the distillers' grains livestock feed produced as a byproduct of ethanol manufacture, besides just the biofuel itself.
"There has been no small amount of wailing, name calling and political wrangling over the way that the USDA accounts, or does not account, for distillers' grains in the feed supply," a report from livestock experts Steve Meyer and Len Steiner said.
"Many of these politicians have accused those who oppose government subsidised and mandated ethanol of simply ignoring distillers' grains, which have been touted as a wonderful 'contribution' from the ethanol sector."
'Going to hot up'
However, the industry may be forced to renew its defence of itself after the USDA last week made substantial cuts to its estimate for domestic, and world, corn inventories, forecasting domestic stocks would end 2011-12 at a historically weak level for a second successive season.
"Never in history have we had such tightness in supplies in back to back years," Don Roose, president of US Commodities, told Agrimoney.com.
"It looks like [corn] prices are going to stay high for another year. The food versus fuel debate is going to hot up."
The comments came ahead of a vote on Tuesday in the US Senate on ethanol subsidies in what could be the first step on their elimination.
"The House of Representatives is not expected to address the issue in the next couple of months," Brian Henry at Benson Quinn Commodities said.
Decline in oats
The Meyer and Steiner report said that while distillers' grains had filled some of the gap presented by diverting corn from feed use to ethanol production, "the trade is still three pounds of corn for one pound of distillers' grains".
"The total of corn and distillers' grains… has actually been trending downward slightly. Where would we be on feed supplies had [livestock producers of] all the major species not cut back their output since 2007?"
Tom Elam of FarmEcon added that the picture on feed supplies appeared even more distorted by ethanol when considering a dash by farmers to corn from the likes of barley, oats and sorghum.
"Corn acres have grown at the expense of the other three feedgrains," Dr Elam said, with production of the three grains more than halving between 1990 and 2010.
The US oats harvest shrank by nearly three-quarters.
Ethanol plants vs livestock farms
The USDA last week, in its latest Wasde report on world crop supply and demand, pegged the domestic corn harvest this year at 13.2bn bushels, 305m bushels lower than previously expected.
Inventories will end 2011-12 at 695m bushels, a downgrade of 205m bushels, with the cut in production in part offset by a lower forecast for feed use, to 5.0bn bushels.
The revision left consumption of corn by ethanol plants, at 5.05bn bushels, set to exceed that of use in livestock feed for the first time.
However, Mr Roose added that, longer term, livestock farmers may regain their advantage, as the bioethanol industry switches to the next generation of feedstock, such as waste cellulose matter, and with biofuel subsidies expected to be withdrawn.