Crop Report: Corn Prices Keep Rising-(but but but it was to be be cheap/replenish able fuel)

ap ^ | 12/11/06 | By Libby Quaid, Associated Press Writer

[Flavius]

WASHINGTON (AP) -- Farmers are getting the best price for corn in more than a decade amid strong demand for ethanol and feed, the Agriculture Department reported Monday.

Average corn prices for the year were forecast at $2.90 to $3.30 a bushel, up 10 cents from last month's estimate, according to the monthly crop report.

he last time prices were as good was 1995, when the average was $3.25 a bushel. This year is the fifth time corn prices have risen above $3 a bushel. Last year's average was $2 a bushel.

The production forecast was unchanged at 10.7 billion bushels of corn, down from last year's 11.1 billion bushels. The nation's ethanol fuel plants are expected to use about 20 percent of the corn crop, and exports should consume roughly the same share.

Analysts also left the forecast unchanged for soybean production, predicting 3.2 billion bushels, up from about 3 billion bushels last year.

The price forecast for soybeans rose to $5.70 to $6.50 a bushel, up from last month's estimate of $5.40 to $6.40 a bushel. Last year's price was $5.66 a bushel. Roughly 35 percent of the crop is expected to be exported to foreign markets.

Export demand has softened, however, for beef and poultry, the department said. Analysts lowered the export forecast for beef amid problems with shipments to South Korea and for chicken amid slower-than-expected sales.

[flashbunny]

false choice. MTBE shouldnt' be there either. We should have clean burning gasoline, free of bad government mandated gas.

Everyone always wants to present these choices:
1. Foreign oil
2. Ethanol substitute
3. Ethanol additive or MTBE additive.

The real choice isn't any one of those, it's drilled in america good old gasoline. People have been so condition to accepting the government provide choices they forget to ask for the best one that the government refuses to offer.It's become a sad nation of sheep.

Don't fight for the worst of three government provided choices - fight for the best one and demand the government follow your lead.

[TKDietz]

Just how much are ethanol producers subsidized? Corn farmers receive subsidies that go down when the price of corn goes up. Ethanol blenders, often your local oil/gasoline companies that supply gas stations get a $.51 per gallon income tax credit for every gallon of pure ethanol the blend in. As far as I know the producers themselves don't get any subsidies unless a state gives them the subsidies. They make a profit because they can produce ethanol for somewhere in the neighborhood of a dollar a gallon and then sell it for more than that.

[Wonder Warthog]

"but will the pro-ethanol morons get a clue?"

Actually, it's the knee-jerk anti-ethanol morons who need the clue. This "price rise" is a barely noticeable statistical fluctuation in the historical price of corn.

[Keith in Iowa]

>>>Just wondering, how much is the yearly subsidy for Ethanol production?<<<

Less than Big Oil: http://www.ethanol.org/pdfs/oil_incentive_study.pdf

[flashbunny]

google ethanol subsidies,and read awhile. the cato institute did a report years ago on ADM and how much they get - it was disgusting. I wish they'd do a new one.

The amount of ethanol subsidies, the impact of mandate (and effects on the free market and personal choice) and the environmental impact are all things the ethanol lobby and their acolytes try to hide or deny.

You know, ethanol right now strikes me along the lines of trans fats- something the liberals, nannies, and government wanted, and now they all say it's evil. I don't know if that will ever happen with ethanol though, as long as politicians can buy iowa, and adm can buy politicians.

[Wonder Warthog]

"For which, would you rather deplete the topsoil?"

The Ag Experiment station at the U of Iowa has been single-cropping corn on the same land for a century and a half. Yields have gone up continuously.

Gee, do you think they just "might" know how to grow corn without "depleting the topsoil"??

[mysterio]

You can make biodeisel out of almost anything.

[OldGuard1]

I'm curious, so I'm going to do some research and math on ethanol subsidies.

Looks like the current federal subsidy is $0.52/gallon blended into gasoline. Corn subsidies vary widely. In recent years, they've been something like $3B, so lets go with that. American corn production is, what, 9B bushels? So that's a $0.33/bushel subsidy on corn. 2.5 gallons of ethanol are produced per bushel, so the corn subsidy is $0.132/gallon. Lets assume that ethanol is 75% of the profit of that bushel (since you still get the protein, etc for animal feed), and it goes up to $0.176/gallon. So, since the ethanol subsidy effectively displaces the corn subsidy (the higher corn prices (i.e, the more the demand), the less subsidy is given), lets say that the real effective ethanol subsidy is like $0.34/gallon. The non-subsidized price of ethanol is something like $2.00/gallon to produce, so 17% of the price of ethanol is effectively subsidy. If you don't count the offset to corn subsidies, it's closer to 25%.

Hmm, that's not as much as I was expecting. If I did the math right, that is. Anyone know how much of gas prices are subsidized? I know there are subsidies, but I'm not sure of the scale of them. Darn interference with the free market makes simple cost comparisons difficult. :P

[Concho]

Once they perfect the enzymes needed for fermentation, they will also be able to make ethanol from almost any plant or grain.

[capitalist229]

The commodities bubble has finally rolled over into ag products. This has been predicted for a while so it's no surprise to the industry.

It has nothing to do with ethanol.

BUMP

[OldGuard1]

It's not "bad gas" that causes nitrogen oxides, particulate matter, and carbon monoxide. It's a fundamental part of hydrocarbon combustion without an oxygen-containing additive inside typical automobile engines. In the same way that it's not "bad ethanol" that contributes to smog or "bad MTBE" that contributes to water pollution.

[Fierce Allegiance]

Ethanol sucks as a motor fuel. Period. End of story.

[mysterio]

Good. Every drop of fuel we make is one less bit of cash going to our enemies' bomb fund.

[Concho]

Right, Einstein, that is why they use it as a racing fuel.

[JZelle]

All these posts and no mention of Clarence Beeks.

[Keith in Iowa]

>>>Ethanol sucks as a motor fuel. Period. End of story.

Whatever, genius.

Meanwhile, I'll keep using E-10. And my next vehicle will be either one that can do E-85 or biodiesel.

[TKDietz]

You didn't answer my question. The correct answer would be that ethanol producers get no federal subsidies unless they are actually the ones blending the ethanol with gasoline. Then they'd be getting a tax credit.

I don't like the subsidies either. I wish the government would phase them out. I think the ethanol industry could make it without the subsidies to corn farmers or the $.51 tax credit to blenders. If corn prices stay high, the subsidies to corn farmers should disappear for the most part, at least those paid out to make up the difference between the actual market price and the price government sets. That's the bulk of the subsidies paid to corn farmers. A while back they were getting $.14 a bushel, but that was when corn was much cheaper. I don't know what they'll get now but if they get anything it shouldn't be much. Next the government needs to phase out the $.51 tax credit that blenders get. That will be tough on the ethanol industry because they'll have to keep costs down enough such that they can still make a profit and sell their product cheap enough that consumers will still buy it. Some ethanol producers would fold, but I think most would adapt and make it. Ethanol is not that expensive to produce and they are figuring out new ways to reduce costs all the time.

[Salgak]

Nothing WRONG with ethanol. . .but corn is by no means the most efficient means of growing ethanol feedstock. There are better alternatives. . .rapegrass/rapeseed comes to mind.

As does processing oil and tar sands for petroleum: we have several generations' worth of all the petroleum we'll need tied up there.

The bottom line on alternative energy sources is twofold:

1. They ARE less efficient than using petroleum: if they weren't they wouldn't BE alternatives, they'd be primary sources.

2. With lower efficency, comes lower cost-efficiency. As a result, alternatives are far more subject to price and supply fluctuations in both supply and price. . .

[Flavius]

hehe i dont trade futures yet

[Fierce Allegiance]

Right, Einstein, that is why they use it as a racing fuel.

Right, twinkletoes, it was a gimmick race fuel. You could run a race car on hydrogen, too, but that would be similarly stupid.