U.S. farmers plan to cash in on the fuel ethanol boom by planting the largest area of corn in 63 years, potentially yielding a record crop and calming fears that renewable fuels will steal grain needed for food and feed, the federal government said Friday.
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.
because the corn lobby has more money than the switchgrass lobby. It does not matter that corn is one of the most inefficient ways to make ethanol. The good old status quo will win out.
... earlier this month"; and, "There are 114 ethanol distilleries in operation across the country which produce ethanol from corn..." uuuummm.... some nice figures for the financial analysts to romance with all the way to the banks. It would seem like (after that "State Of The Union Address" earlier in the year and with his successful tour to bring his Brazilian counterpart aboard his alternative energy; and, if the Bush Administration was running for office again it would appear that they would have been returned to office with the support of dem "happy" farmers and "ethanol" distillers!
"Towards a Hemispheric Biofuels Market: The Outlook for Private Investment"
"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."
The demand for oil continues to rise...particularly in the rapidly expanding economies of China and India...That...coupled with continued instability in the middle east had led to the spikes in the price of oil we have seen in the past few years...$100 a barrel oil could be a reality soon...It will be nice to have an alternative infrastructure in place when it gets here...For now...ethanol made from corn is the best contender...switchgrass made ethanol is on the horizon...other alternatives are in development too......When the price of oil and thus gasoline reaches a high enough level these subsidies will no longer be needed...But they are needed now to spur 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...
Re: Ethanol is heavily subsidized. It makes no economic sense.
Well, perhaps you're correct in that it makes no sense 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
This is all so wrong! Aren't there any leaders out there who stayed awake through high school science class?
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.
... by your poor use/choice of the word "mad"... sometimes when we point we sometimes fail to see what is pointing back at us; also, are you forgetting that it around the "economic" superstructure that the scientific systems, technology... revolve around; so, those who fell asleep "through high school science class" could have been well awake during "graduate Economics" and "Information Technology" classes!
Consider how corn is grown in this country: using tons of fertilizer, herbicides and pesticides - all derived from petroleum! plus the use of heavy machinery to plant and harvest it - using petroleum for an energy source! The use of ethanol as an energy source is at best very short-sighted and at worst, perpetuates our dependence on petroleum. There is an elegant discussion of this in Michael Pollan's book, "The Omnivore's Dilemma". Which, on the face of it, is about what and how we eat, but at it's core is about the destructive model of agriculture in this country, which is heavily dependent on petroleum and it's products. Did you know that most of the corn we grow is force-fed to beef cattle, hogs and chickens? And what they can't feed to livestock is turned into high-fructose corn syrup and added to almost all processed foods. Maybe it doesn't sound related, but it is.
This is a lousy solution to our energy problems. The real reason this is being promoted in America is to allow consumers to continue to purchase gas guzzlers while deluding themselves that they're 'green' because they're E85 vehicles.
In past years the US had virtually given away billions of dollars worth of corn and wheat, now maybe we can make some use of the surplus and solve our own problems. The oil companies aren't going to be happy, but no happier than if the oil just dried up. The auto companies have to get with the program and get their hardware to run on E85. Auto repair compnies will be very happy retrofitting the older cars so they will run on the E85 gas, but sacrifices have to be made.
As long as we dont open the doors to importing from China. Look what happened to the pet food industry because some slimey importer was looking to save a few pennies. ( Lets feed those unidentified people some of their own dogfood to mix an expression )
I haven't done the numbers for sugar cane, but for switchgrass, 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.
Web giant is spending $120 million to beef up its Mountain View, Calif., headquarters, according to filings with the city reviewed by the San Jose Mercury News.
Tor's "obfsproxy" technology would make encrypted data look innocuous and let it dodge government censors. That could help citizens in Iran reach blocked sites as antigovernment protests reportedly loom.
MIT creates a simulation to celebrate the 50th anniversary of Spacewar. A relic of the early days of minicomputers, it was one of the first computer video games and set the stage for many others, including Asteroids.
"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.