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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New Study Touts Benefits of Ethanol Tax Credit

If ethanol is the “saving grace” for U.S. corn producers, as one economist suggests, then the federal ethanol tax credit has helped keep biofuels in a relative state of grace.

But the credit, which gives fuel marketers an incentive to blend ethanol into the nation’s gasoline, has fueled additional economic ripples, according to a new study released last week.

Energy analyst John Urbanchuk concluded the incentive, set to drop per gallon from the current 51 cents to 45 cents in 2009, has put an additional $66.2 billion into U.S. consumers’ pockets since 1978.

Download Urbanchuk on impact of Blenders credit 111808

Ethanol Aid Unfair

Livestock producers and meatpackers say it would be unfair for the government to guarantee loans to ethanol plants that are in financial trouble because of the high prices they paid for corn.

Offering such assistance to ethanol producers "would be a startling new development that discriminates in favor of one segment of American agriculture," eight organizations representing meat and livestock sectors said in a letter to U.S. Agriculture Secretary Ed Schafer.

(Source: Des Moines Register)

E85 Stations Now Top 1,800

The National Ethanol Vehicle Coalition (NEVC) reported today that the number of E85 fueling stations has now exceeded 1,800, an increase of 28 percent since October 2007. E85 is the term for motor fuel blends of 85 percent ethanol and 15 percent gasoline. In 2001, there were only 50 E85 stations.

“We believe that E85 represents the only significant growth opportunity in the field of liquid fuels,” said Phil Lampert, executive director of the NEVC.

States with the highest number of E85 sites are: Minnesota with 357,  Illinois with 188 and Missouri with 112. Seven states do not offer E85 including: Maine, New Hampshire, Vermont, Rhode Island, New Jersey, Alaska and Hawaii.

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.

New Group Forms to Defend Ethanol

A new group is adding its voice to the debate on using crops to produce alternative fuels such as ethanol amid rising food prices and shortages in some countries.

The Alliance for Abundant Food and Energy in Washington D.C. was created by Archer Daniels Midland Co, DuPont Co, Deere & Co, Monsanto Co and the Renewable Fuels Association (www.foodandenergy.org).

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.

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