"We have to remember that RFS volumes are a minimum and production of renewable fuels can always be higher," he notes.
The primary demand for corn ethanol is the 10% blend with all gasoline sold in the U.S. The amount of ethanol needed to meet this demand depends on how much gasoline is consumed for the rest of this year and into next.
Hurt said he expected 2013 gasoline consumption to be near 133 billion gallons and slightly less for 2014.
"This means ethanol consumption will need to be about 13.2 to 13.3 billion gallons – a number that is above the EPA proposal and would require almost 4.9 billion bushels of corn," he said.
Consumption of E85 is another area of potential growth for the corn ethanol sector. But a gallon of E85 produces less mileage than higher gasoline blends, Hurt says. That means gasoline prices would have to be much higher or E85 prices much lower to spark demand growth.
"While ethanol and E85 are not sufficiently low-priced right now to make greater E85 use economic, low corn prices would be one of the conditions that could provide lower E85 prices later in the marketing year," Hurt said. "For example, February ethanol futures are 60 cents lower than current cash prices."
Don't count out exports
Another area of potential corn ethanol demand is exports. Low corn prices will eventually mean lower ethanol prices, making U.S. ethanol more appealing to foreign buyers. It also means the U.S. can produce its own ethanol cheaper than importing it, thus creating domestic demand.
Hurt said there are clear indications that exports will continue to grow, while imports have all but stopped.
"While it is still too early to make accurate predictions of trade volumes, net exports in the range of 400 million to 550 million gallons of ethanol might be likely," he said. "If so, that could add 150 million to 200 million additional bushels of corn use for ethanol.
Greater corn use for ethanol could help growers who are hoping for some price recovery for the 2013 crop. According to Hurt, corn use for ethanol could exceed the USDA projections by about 100 million bushels.
While that alone wouldn't be enough to bring corn prices back to $5 per bushel, corn exports also are currently pacing above USDA projections, which could lead to some price increases.
"These two support a growing usage base that is being stimulated by low corn prices and should help corn prices to establish a bottom before beginning a modest rally," Hurt said.
The extent to which corn prices recover could also depend on likely upward revisions to the final 2013 corn crop size by USDA on Jan. 10, he says.