IFB Ethanol Blog

WASDE: Ethanol Demand Down

The Agriculture Department's World Agricultural Supply and Demand Estimates (WASDE) released today places corn used for ethanol production at 3.7 billion bushels, down 300 million bushels from the November estimate.

"The most dramatic change in the December WASDE report was the big drop in corn used for ethanol production," said Terry Francl, senior crops economist with the American Farm Bureau Federation (AFBF). "I am surprised that corn use for ethanol dropped by that much. Demand for ethanol is down, just like demand for gasoline is down, but I just don't think the decline is that large. I believe 3.8 billion bushels to 3.9 billion bushels is closer to the mark."

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Verasun update

Bankrupt ethanol maker VeraSun Energy Corp said on Tuesday it would cancel nearly all its contracts to buy corn for its U.S. BioEnergy plants for deliveries through Jan. 15.

VeraSun lawyer Felicia Perlman told a bankruptcy hearing the company would also cancel contracts to buy corn for its Welcome, Delaware, plant through Jan. 31, but that contracts for its U.S. BioEnergy plant in Marion, South Dakota, were not included in the cancellation plans.

Lower Corn Prices Hitting Farmers

Steve Ruh likes what he has seen in his fields this fall. But the Sugar Grove farmer said he can't say the same for what he has seen when he has taken his crops to market.

"The harvest this year is going to be above average, certainly," Ruh said. "So from that perspective, it's going to be a very good year.

"But what's happening to prices, that's not going to be so good."

For almost two years, ethanol has fueled more than just cars.

Demand for the biofuel that is blended into every gallon of gasoline sold in the U.S. has also been a leading driver behind a rapid rise in the price of corn, in turn helping corn growers in Kane County and throughout the country earn more for their labor.

But in more recent months, demand for ethanol, as well as for all other forms of energy – crude oil, gasoline and natural gas – has sagged, causing energy prices to rapidly decline.

And that, in turn, has left many farmers and agricultural services companies a little lighter in the pocketbook.

(Source: Kane County Chronicle)

Ethanol Subsidy Study

Various state governments began supporting ethanol use before the federal mandates were implemented, and they all vary in style and amount from state to state. However, they have impact on the ethanol demand when crude oil prices are high, and the lower ethanol taxes allow the ethanol blends to cost less than pure gasoline. But economic analysis of the state promotional initiatives indicate that removing all of the tax incentives and ethanol use mandates would have only a modest impact on the overall use of ethanol. And the impact on the farm would be to lower corn prices by about 1¢ per bushel and raise prices of other crops no more than 8¢ to 11¢ per bushel.

(Source: Farmgate blog)