It's possible.. and maybe even probable.. that the entire grain complex moves lower over the next six months as you infer..  The lower wheat acres will probably not be missed... nor planted next year.. as we continue to adjust to fluid/dynamic market conditions.

I haven't had much free time today to look at the reports.. Looking at FAPRI's Baseline outlook.. they expect Course Grain Exports to grow over time while wheat exports recover somewhat from a temporary lull this year but a static no growth scenerio after that.. Soybeans are the opposite of wheat.. after a very good export year this year to decline to around 34 mmt's then static to a gradual incline after that.

Again the need is for producers to fill the Course Grain market.

The challenges are that here it is the middle of March.. not much field work has occured (and in some cases the crops are still in the field) it's wet and within a month the calender says the planters should be heading to the field. With the equipment we have today a lot of work can be accomplished in short order... which is what we were saying last harvest also... and yet the task was/is not completed.

I'm not offering this as a bullish forecast.. just a realistic admission.. that the work that lies ahead will be a challenge.. doable.. but not guaranteed.

As for ethanol.. you could probably answer better than I... the RFA site lists nameplate capacity (not all of which is operating) at about 13.5 Bil gallons..

http://www.ethanolrfa.org/industry/locations/

with an additional 950 mil gallons of "grain based" capacity under construction.  Depending upon efficiencies and conversions.. we have the capacity to utilize the 4.6 to 4.8 bil bu number for next year as I posted above... as you note about 300 to 400 mil bushels more than expected to be ground in the 09/10 crop year... it will probably be on the lower side of that range.. subject to the markets.. (Crude Oil prices...???)

Brazil is forecast by FAPRI to see a return to an upward sloping year to year exports of ethanol which depending upon the rest of the world's demand will impact prices.. although FAPRI also sees a stabilization in domestic US ethanol prices then rising over that forecast period.

In short.. things finally seem to be about right sized.. We have the crop (mostly) in the bin with continued grain production expansion to fill the capacity to convert to the ethanol market.

As you also note.. blenders margins are wide right now.. we are either hitting demand constraints.. or they are dragging their feet before covering more ethanol product... probably some combination.  As we approach the driving season.. the demand for fuels should increase.  EPA can go ahead any day now on the expansion of ethanol.. let's get these "green jobs" going.

Expanding my focus.. FAPRI would suggest that as Brazil recovers from the Sugar price spike that they would stand ready to at least partially fill any US grain production/ethanol shortfall.

US grain producers who are willing to fill these markets at these price levels could secure them if they act now..  We now have the markets that others would love to fill... and probably would if given the chance.

The Wheat market is a dog.. the Soybean market after this year will face stiff SAm competition..irregardless of whether we have a US ethanol market or not.  It's the Course Grain market (Corn/Sorghum/...) that is expected to continue to grow over time. 

The US producer needs to HIT that CORN GROWING WINDOW!!  If we have another big crop.. then build a bin.. at some point we will need the grain.

I'm probably a little high.. naive.. on my expectations..??  USDA has announced another sign-up for the CRP..  If we can continue these yields.. then we don't need as much to come out of the CRP.. which most would like to leave alone.  If it's good land (put in CRP for farmer retirement) then farm it.. build a fence around it... whatever.. if not.. sign it up again. 

However at some point we can expect another down turn in yields.. the tree ring post below tells us this truth.

Kind of like watching the Space Shuttle take off... "looking good... on course... not there yet."