March 30, 2007 11:41 AM PDT
Ethanol fuels huge corn planting
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At the Chicago Board of Trade, corn futures prices plunged the daily trading limit of 20 cents a bushel on prospects for a huge crop. Prices for this year's soybean crop fell as much as 33 cents a bushel, and wheat was down 27 cents a bushel.
Yet even with record output, this year's corn crop could sell for a record $3.50 to $3.60 a bushel at the farm gate, market watchers said. Corn prices on the cash market have doubled since last fall due to explosive growth in the ethanol industry, driving up costs for cattle, dairy, hog and poultry producers.
Based on a survey of 86,000 farmers earlier this month, the Agriculture Department projected corn (maize) plantings of 90.454 million acres, which would be the largest acreage since 1944. With normal weather and yields, the harvest would be 12.5 billion bushels--700 million bushels more than the record set in 2004.
"With a medium yield, we could get just about enough corn in the year ahead," said private consultant John Schnittker. USDA forecasts corn usage of 12.3 billion bushels in 2007-2008, including 3.2 billion bushels for making ethanol, up 1 billion bushels from the 2006 crop.
Farmers could collect nearly $46 billion with a mammoth corn crop, said Ann Duignan, an analyst at Bear Stearns, "which in our view is positive" for sales of farm equipment.
The chairman of farm equipment maker Agco, Martin Richenhagen, said when farmers are flush with cash, "they often then invest in equipment."
The Renewable Fuels Association, a trade group for alternative fuels, said with high yields the U.S. corn crop could hit 13 billion bushels. "Such a harvest would meet the needs of all the sectors that rely on it," said RFA.
There are 114 ethanol distilleries in operation across the country which produce ethanol from corn. Production is projected to exceed 6 billion gallons this year compared with 4.89 billion gallons in 2006, and some 3 billion gallons in capacity will be added in 2007, the group said.
Planting intentions are months away from actual harvests.
"The weather is going to drive it all," said Tom Buis, president of the National Farmers Union, pointing to the uncertainties of the growing season.
Growers told USDA they will cut back on soybeans in the Midwest and on cotton and rice in the South to sow more corn. Soybeans are forecast at 67.140 million acres, the smallest area since 1996, while upland cotton would be the smallest since 1989 at 11.855 million acres. Rice, at 2.64 million acres, would have the smallest seeded area since 1987.
USDA forecasts only a modest rise in food prices this year, but said, "With high corn prices increasing feed costs, beef and poultry price increases should begin to accelerate in 2007."
Schnittker said a large corn crop this year would stabilize food prices in 2008.
Iowa, traditionally the No. 1 corn state, would plant 13.9 million acres this year, up 1.3 million acres from 2006, USDA said. Illinois would plant a record 12.9 million acres of corn, up 1.6 million acres, while cutting soybean plantings by 1.4 million acres, the largest decline in the country.
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"Inter-American Development Bank President Luis Alberto Moreno, former Florida Gov. Jeb Bush and former Brazilian Minister of Agriculture Roberto Rodrigues, co-chairmen of the Interamerican Ethanol Commission, will review the road ahead for private investment in the hemispheric biofuels market at a April 2 briefing at IDB Headquarters in Washington, D.C."
<a class="jive-link-external" href="http://www.iadb.org/NEWS/articledetail.cfm?artid=3733&language=En" target="_newWindow">http://www.iadb.org/NEWS/articledetail.cfm?artid=3733&language=En</a>
$$$$$$......... (smile)
further ethanol expansion...The oil lobby has done a great job over the years spreading misinformation about ethanol...But the truth is ethanol is produced much more efficiently than it was just a few years ago...and that efficiency level continues to rise...
economically AT THIS TIME. However, hopefully the method for
producing ethanol will become more economically viable as time
goes on and and it will no longer need to be subsidized.
In a newsgroup I take part in, there's a guy who's always talks up
hydrogen and everybody there always slams him. Some of the
same people also call hybrid cars "not worthy even as a bandaid
technology".
Certainly we're all entitled to our opinions, but my opinion is
that if we had been looking into these same technologies YEARS
AGO, we would probably be using them heavily today and they
would be economically viable.
We need to start somewhere and if subsidizing them gets them
going, then it's probably a good investment.
Charles R. Whealton
Charles Whealton @ pleasedontspam.com
High value crops like corn are only useful if you use fermentation to make ethanol. This is a fine process if you want whisky, but a very wasteful way to make fuel.
Too many people are investing in something that cannot work: The corn market will collapse from over production, farmers will go under, and the oil companies will be laughing with glee.
even though the energy yield is a lot better than for corn, it will be
hard to get much more than say 2/3 of our transportation fuel
from ethanol without requiring so much more land that it will
inevitably impact food supplies. Sugar cane might be more
productive, but as far as I know, it has only a relatively small
growing range in the US. We need a mix to get us through-
ethanol, wind, solar, nuclear, algae if that works out, whatever.
Corn, in the long run, not so much.