IFB Ethanol Blog

USDA Report Highlights 2009-10 Ethanol Use

Ethanol makers will use 4.1 billion bushels of corn to make the renewable motor fuel during 2009/10, up from 3.75 billion bushels this marketing year, the U.S. Agriculture Department projected on Tuesday.

"Ethanol use, at 4.1 billion bushels, reflects the rising federal biofuels mandate and improved blending incentives as higher gasoline prices increase demand for ethanol," said USDA in a monthly update. "Ethanol producer returns, however, will remain under pressure as excess production capacity weighs on
producer margins."

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

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.

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.

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.