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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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)

Higher Ethanol Fuel Blends OK, But

Cars running on higher levels of ethanol than now permitted get poorer fuel mileage, but there is no significant impact on tailpipe emissions, according to a new government study.

Most cars and trucks can legally run on no more than 10 percent ethanol, but the government is looking at the impact of allowing higher-level blends to keep expanding use of the biofuel.

The Energy Department study, released Tuesday, looked at the impact of using blends of 15 percent to 20 percent ethanol. One concern the study did not alleviate is the impact on cars' emission controls. The researchers said that, at full throttle, increased ethanol content could heat some cars' catalytic converters. That's a concern because excess heat could damage the pollution control devices. The researchers said additional study was needed.

Thirteen popular car models, from 1999 to 2007, were included in the study, as well as 28 types of engines used in lawn equipment, generators and other machinery.

(Source: Des Moines Register)

Verasun on wrong side of corn market

The Des Moines Register reported today that Verasun Energy Corp., which has several ethanol production plants in Iowa, expects to post a loss of as much as $103 million for the third quarter after being caught on the wrong side of a swing in the corn futures markets last summer.

The company said that it got out of its futures positions in corn last summer when the price reached a record $7.99 per bushel. Instead, Verasun made physical purchases of corn that have turned out to be higher than today’s prices and have resulted in unprofitable input costs for the company.

Crop Size and Energy Impacting Corn Prices

Two broad fundamental factors appear to be influencing corn and soybean prices as the growing season reaches the last stages, said a University of Illinois Extension marketing specialist.

"One of those factors is the potential size of the 2008 U.S. harvest and the other is the level of energy prices," said Darrel Good.

"Crop size is important for obvious reasons and energy prices are important in determining the value of crops for biofuels production.

"That link is especially important for ethanol and corn prices."

On Sept. 12, the USDA will release a new production forecast for corn and soybean.

There appears to be a fairly wide range of expectations for the size of the new forecasts, which will primarily reflect a reassessment of yield potential.

"The dry end to the growing season in some important production areas has some leaning toward smaller yield forecasts," he noted.

Lugar Wants Ethanol Tariff Eliminated

Sen. Richard Lugar (R-Ind.) has sent a letter to President Bush urging him to eliminate the 54-cent ethanol duty on imported ethanol to ease corn demand. “To demonstrate leadership, the United States should lift its tariff on Brazilian ethanol that now shelters the U.S. industry,” the senator stressed.

Lugar said eliminating the tariff would provide more competition and a better biofuels market in the long term. Brazil can provide ethanol to our coasts more efficiently than from our 15-state heartland,” Lugar said. “It is expected that the food crisis will endure a number of years and could have lasting effects. A situation of such long duration threatens to reverse any positive trends in the alleviation of poverty and improvements in health.”

NYT: Obama has close ties to ethanol industry

Surprise, surprise!

U.S. / Politics

Obama Camp Closely Linked With Ethanol

By LARRY ROHTER

Published: June 23, 2008

The ethanol industry has provided some top advisers to Senator Barack Obama, who has delivered ringing endorsements of ethanol as an alternative fuel.

Full story

High Corn Prices Shut Down Ethanol Plants

Record corn prices pushed up by flooding in the Midwest have forced five small to mid-sized U.S. ethanol plants to shut and output of the biofuel could be slowed for months, a Citi research note said on Friday.

The plants shuttered were not identified, according to the report.

(Source: Reuters)

Ethanol's Role in Corn Prices

Those who blame ethanol for high corn prices need to dig deeper - oil well deep, said a Purdue University agricultural economist.

"If you say biofuel production is the reason corn prices are going up, you would be right," said Wally Tyner, an energy policy specialist. "But the more important question is why biofuel production is up. Many have blamed the federal subsidy on ethanol, but today that is a small part of the overall picture."

The recent run-up of crude prices to $120 a barrel and more has had a profound impact on corn prices, Tyner said.

"Moving from $40 a barrel oil to $120 oil with no ethanol subsidy or Renewable Fuels Standard mandate in effect still leads to a tripling of corn prices," he said. "With no subsidy or mandate, corn moves from $1.71 a bushel at $40 oil to $5.26 a bushel at $120 oil. With the subsidy or mandate, corn moves from $2.26 a bushel at $40 oil to $6.33 a bushel at $120 oil.

Full story

FAO Report Says Grain Prices to Remain High

    PARIS, May 29 (Reuters) - Food prices will remain high over
the next decade even if they fall from current records, meaning
millions more risk further hardship or hunger, the OECD and the
UN's FAO food agency said in a report published on Thursday.
    Beyond stating the immediate need for humanitarian aid, the
international bodies suggested wider deployment of genetically
modified crops and a rethink of biofuel programmes that guzzle
grain which could otherwise feed people and livestock.
    The report, issued ahead of a June 3-5 world food summit in
Rome, said food commodity prices were likely to recede from the
peaks hit recently, but that they would remain higher in the
decade ahead than the one gone by.