U.S. corn futures topped out at record highs on June 11 on the news that the impact of flooding in the Midwest would hurt this year's corn crop, but the June 11 "CBS Evening News" left out one significant detail in its reporting about the crisis.
"[A]gricultural disaster aid has been requested for Iowa, Illinois, Wisconsin and Michigan," CBS correspondent Cynthia Bowers said on the June 11 "Evening News." "The federal government estimates that this year's corn crop will be 10 percent lower than last year's. That's down 1.4 billion bushels, and it's too late to do much about it."
According to a Reuters story, corn prices on the Chicago Board of Trade have shot up 80 percent in the last 12 months, with almost 17 percent of that just this month. But Bowers didn't explain how the prices got so high before the floods, which put consumers of corn products in this vulnerable position. Corn futures were already priced high because of a heightened demand - artificially stimulated by federal government subsidies for ethanol produced from corn.
"As a result [of the flooding], corn is trading at all-time highs - up 52 percent for the year, topping $7 a bushel," Bowers said. "And analysts say it's headed for $8 [a bushel] - costs that will soon be passed on again at the grocery store where consumers are already paying more for anything with the word ‘corn' in it."
One futures analyst predicting corn at $8 a bushel directly blames ethanol mandates from the U.S. government and the recent moves of the price of crude oil into record territory.
"I believe a reasonable target for corn by the end of this year is $8, which would largely be dictated by price movements of the U.S. dollar and crude oil," Carol Hurley, a senior market strategist with Lind-Waldock, a futures brokerage service, wrote for Insidefutures.com on June 11. "If crude oil continues to rally, that will naturally push corn higher because of ethanol mandates by the U.S. government."
Editor at Large
Comments Policy
C.B.S (Communist Broadcasting System)
June 12, 2008 - 16:09 ET by American TaxpayerIt would be nice just for a change if C.B.S (Communist Broadcasting System) would actually try reporting the news instead of making it up as they go along. I thought these were highly trained professionals who always got the story correct the first time, unlike those pesky bloggers. Will C.B.S ever report on all the oil reserves in this country that are off limits. I think not that would be too much like actually doing your job.
Clearly we can't grow our
June 12, 2008 - 16:29 ET by ckc1227Clearly we can't grow our way out of this problem, so Congress should make every effort to write legislation preventing the growing of any additional food, corn included, with the hope that doing so will encourage innovation into creating alternatives to corn and food. It's the only way.
I think it's time to
June 12, 2008 - 17:50 ET by MidAmericaI think it's time to haul the executives of 'Big Corn' before congress to explain the high prices.
MA, I think you've got an
June 12, 2008 - 19:35 ET by motherbeltMA, I think you've got an idea there! LOL
Did you ever notice how liberals hate Big Oil, Big Pharmaceuticals, Big HMO, Big Insurance, Big Everything, they are all evil?
Except for Big Government. That's good for everybody!!
Well, boy howdy!
June 12, 2008 - 17:54 ET by c5thenMaybe Congress should be talking about Windfall Profits for corn growers and traders? Does Congress realize that ethanol can be derived from other grains and not just corn? I guess this means that all grain shipments to North Korea are now cancelled because we won't have any surplus to ship?
The day that "politician" became a career choice is the day we started losing the Republic. Let's get it back! Alan Keyes '08.
How convenient for them
June 12, 2008 - 19:31 ET by motherbeltHow convenient for them that there was some flooding for them to blame it on; now they won't have to deal with that pesky ethanol thing.
Hey, if not floods, they could always go the AGW route!
Don't discount the floods' affects on corn prices
June 12, 2008 - 20:21 ET by nkviking75Motherbelt, I'm in the flood zone, and I can tell you that the impact of the floods on prices is very real. I'm not downplaying ethanol, just saying you can't downplay our 500 year floods. (The second 500 year flood in 15 years. How does that work?) Corn was late getting planted. Then a lot of it was drowned by the floods. Around here, Sunday is the last day corn can be planted with any hope of maturing in time. The floods are a major hit to the corn crop, and they will drive corn prices higher.
When you put the clowns in charge, don't be surprised when a circus breaks out.
Not saying the floods
June 12, 2008 - 21:46 ET by motherbeltNot saying the floods aren't serious, I'm sure they are (and I hope you and yours are not in danger).
However, what do you think the chances are that the added stress on supplies (therefore prices) due to the flooding will cause them to back off a little on the ethanol mandate?
The ethanol industry will fight back
June 14, 2008 - 00:28 ET by nkviking75Our Iowa senators (including Ag Committee chairman Tom Harkin, who is up for re-election) are arguing hard for ethanol. Farm organizations and ethanol producers are advertising here in Iowa to shore up support. They're fighting back. In one sense I can't blame farmers and ethanol companies. They have a lot of money riding on ethanol. But overall it's a bad deal for America.
The libs are committed to killing off the oil industry, and the ag industry loves the increased income. Don't look for them to back off on ethanol.
When you put the clowns in charge, don't be surprised when a circus breaks out.
viking
June 14, 2008 - 00:44 ET by Cool ArrowThat's how I am with public schools.
On the one hand I can see teachers lobbying for more money regardless of their performance.
On the other hand, we're just rewarding lackluster results with money more effectively spent elsewhere.
LYDSEXICS UNTIE
Starch
June 12, 2008 - 21:24 ET by kilrodAre you folks aware that you only take the starch out of the corn to make ethanol. The starch is about a fourth of the grain, the rest, three fourths, goes right back into livestock feed. The main culprit for the higher corn price is the speculator and the increased demand from developing countries. You add this flood, which is likely to reduce the crop by 20% instead of 10, to the power of big money speculators you are going to see record high prices and you better start hoping for a bumper crop in 09, and you better hope the higher prices are an incentitive for increased corn acres in 09 and you better hope their is not a corn crop failure elsewhere in the world.
kilrod
Remember, only two defining forces have ever offered to die for you, Jesus Christ and the American Soldier
09 will likely be worse
June 12, 2008 - 22:22 ET by metroxyou see, 2 full years now of a quiet sun
cycle 24 cannot get a grip, cycle 23 still rules albeit with miniscule sunspots
if the sun continues its nap through winter the cooling trend of 2007 will continue through 2008 and likely only worsen/shorten the growing season
this would be the proverbial nail in the coffin of the ethanol mandate, so, for that I am thankful as some pain now will decrease monumental pain downstream (i.e. the current outrageous ethanol mandates).
not to mention the side effect of completely derailing 'lieberman' economic turmoil of the climate change bill for a while longer
by the way, here's a link on your comment on how Ethanol is made:
http://www.ethanolrfa.org/resource/made/
so what if the production of Ethanol yields livestock feed, it still requires a base feedstock to create Ethanol and it is that need that has depleted our inventories
Keep on keepin on
June 12, 2008 - 22:45 ET by kilrodHey metrox, keep on keepin on postin them links, yore the best help i've got, yore makin the case for ethanol better than i ever could. I hope everyone who sees this will go to your links, they might be surprised at what they learn. Thanks Again,
(GRINS) kilrod
Remember, only two defining forces have ever offered to die for you, Jesus Christ and the American Soldier
Corn and Wheat stocks are basically GONE
June 12, 2008 - 22:12 ET by metroxand that's why the sky high prices, no inventory left
http://www.tristateobserver.com/modules.php?op=modload&name=News&file=article&sid=10121
nothing in the cupboard
Ethanol mandate is definitely to blame as it exhausted the stocks we had.
(GRINS)
June 12, 2008 - 22:29 ET by kilrodWell metrox, if you beleive the article from the link you provided, you just proved yourself wrong. Ethanol has only had a minor impact on the price of corn.
(GRINS) kilrod
Remember, only two defining forces have ever offered to die for you, Jesus Christ and the American Soldier
? which link ?
June 12, 2008 - 22:50 ET by metroxThe "tristate" story is actually about wheat,
At the end of that article is this link:
http://www.fsa.usda.gov/Internet/FSA_File/wid2a.pdf
observe existing inventories.
The "how ethanol" is made article yields no reference to price of corn.
To make ethanol (from corn) requires you have corn. Since ethanol production is ramping up, it requires more corn than previous corn-based ethanol. The net result of ethanol production is not corn you can directly eat.
Here's another link or two for you:
http://www.salon.com/tech/htww/2007/02/20/high_fructose_corn_syrup/
http://www.treehugger.com/files/2008/02/why_ethanol_pro.php
thoughts?
Wups, LOL
June 12, 2008 - 23:22 ET by kilrodwUPS, metrox, you sent me to a couple of treehuggin, liberal globalist sites, i'm beginnin to suspect you are one of them liberals and i just cain't trust what yore liable to come up with next, so i'm done with recommendin yore links, though some of that stuff on those last 2 links did back up what we've been discussin here, just depends on if you understand whats bein said and all, anyway Merry Christmas an all that. I hope your life without corn is a good one.
(GRINS) kilrod
Remember, only two defining forces have ever offered to die for you, Jesus Christ and the American Soldier
No libtard here
June 12, 2008 - 23:43 ET by metroxOK...how about these links
(yes, this one is from MIT but they try to be non-biased)
http://www.technologyreview.com/read_article.aspx?ch=specialsections&sc=biofuels&id=18173&a=
http://www.csmonitor.com/2006/0726/p02s01-usec.html
http://www.financialsense.com/editorials/cooke/2007/0202.html
(this one is from a newspaper..pretty much all are presumed to be libtarded...but, the reference for the article is Bloomberg)
http://www.chron.com/disp/story.mpl/headline/biz/5829126.html#Intro
http://www.cattlenetwork.com/Content.asp?ContentID=228923
http://www.lavalnews.ca/articles/TLN1612/foodCrisis161206.html
http://www.lavalnews.ca/articles/TLN1612/editorial161204.html
http://www.gather.com/viewArticle.jsp?articleId=281474977371129
and there are many more
you're welcome
Hate to jump into the fray....
June 12, 2008 - 23:36 ET by Founding_FatherThe increase in corn prices are not as much related to ethanol as you would think. The Grocery Manufacturers Association hired a public relations firm to work behind the scenes to increase
public perception that ethanol is a bad product in terms of food. Ethanol is just the only part that Congress can do anything about.
Metrox (or for that matter would our author Jeff Poor) - care to explain the increase in price of soybeans, wheat, cotton, coffee, etc????
The most important factors that are primarily responsible for driving up food costs are:
Since corn is only 30% of all the grain produced, and grain is only 20%
of all food, "ethanol accounts for somewhere between 2 and 3% of the
overall increase in global food prices." -Ed Lazear, the Chairman of Council of Economic Advisors
Could it be...
June 12, 2008 - 23:58 ET by metroxMetrox (or for that matter would our author Jeff Poor) - care to explain the increase in price of soybeans, wheat, cotton, coffee, etc???? As more crop land is converted/redirected into maize/corn production, there is less farmland for other crops, hence increased prices. As for wheat, well, UG99 is not helping at all, is it? (stem rust UG99) more here: http://southeastfarm... Of course, not much coffee raised in the midwest, don't follow it, no ideas there. I do know that coffee follows its own trail, spiking here and there over the years: http://www.fas.usda.... http://lib.store.yah... and http://tutor2u.net/e...
Could it be...
June 13, 2008 - 00:32 ET by Founding_FatherChina imported 420 million bushels of soybeans during 2006-07. That is up from just over
356 million bushels in the 2005-06 marketing year. Japan and Mexico also increased their imports on US soybeans.
Speculators are what is driving the increase in corn and other commodities. This type of speculation causes prices to rise far above what they otherwise would be in a normally functioning market.
The result of corn for ethanol is a drop in the preverbial gas tank...errr bucket...
This fact cannot be refuted. If it can be - i'll eat crow...
Since corn is only 30% of all the grain produced, and grain is only 20% of all food, "ethanol accounts for somewhere between 2 and 3% of the overall increase in global food prices." -Ed Lazear, the Chairman of Council of Economic Advisors
Heckle and Jeckyl
June 13, 2008 - 00:52 ET by Cool ArrowIf I remember my cartoon history correctly, crows eat corn too.
LYDSEXICS UNTIE
Crow anyone?
June 13, 2008 - 00:55 ET by metroxLook here:
http://southeastfarmpress.com/grains/wheat-rust-0611/
you find:
In 2006, 4.9 billion gallons of ethanol were produced nationwide. This value-added processing required almost 1.8 billion bushels of corn or 17% of U.S. corn production.
and
One bushel of corn can produce at least 2.8 gallons of ethanol and 17-18 lbs of distillers grains.
According to this:
http://www.ethanolrfa.org/media/press/rfa/2007/view.php?id=1054
Fuel Ethanol Production
375,000 b/d
which is about 5.7billion gallons a year or just over 2billion bushels of corn. (Actually ended up closer to 7.8billion or 21% of all corn)
According to this:
http://www.nass.usda.gov/Newsroom/2008/01_11_2008.asp
13.1billion bushels harvested in 2007 which is about 15% of the total corn crop went to production of ethanol
this same link details the shift of cropland to corn production and away from other foods
This is a nice graph that shows the extreme ramp up in ethanol production:
http://iftf.typepad.com/photos/uncategorized/2007/03/29/ethanol.png
and this is helpful to show too:
http://www.researchrecap.com/wp-content/uploads/2008/02/us-ethanol-production.gif
image above from this link:
http://www.researchrecap.com/index.php/2008/02/27/us-ethanol-production-capacity-continues-rapid-growth/
link above sites expectation of 4billion gallons of addtional ethanol production capacity coming online. That would end up being 11.8billions gallons or 4.2billion bushels of corn or 32%+ of corn production if last year's record 13.1billion bushels is matched (which is quite doubtful) so if that level of ethanol production is reached it will consume 40%+ of all corn harvested.
crow, warm or cold?
It also requires 70% more
June 13, 2008 - 12:41 ET by bassndudeIt also requires 70% more energy to produce ethanol than ethanol produces. Ethanol also increases the polluting gases, more so than gas or diesel. Ethanol is a scam.
Save a SeAL, club a liberal!!
Ethanol Production is essentially Food Burning
June 13, 2008 - 03:25 ET by PopularTechEthanol Fuel From Corn Faulted As "Unsustainable Subsidized Food Burning" In Analysis By Cornell Scientist (Science Daily)
Answer this: If federal subsidies did not exist for Ethanol, would crops be used for Biofuels?
The Anti 'Man-Made' Global Warming Resource
SO
June 13, 2008 - 07:00 ET by kilrodSo it comes down to which particular set of numbers and "research" you choose to beleive. Yall have a good-un.
(GRINS) kilrod
Remember, only two defining forces have ever offered to die for you, Jesus Christ and the American Soldier
The Ethanol Myth
June 13, 2008 - 08:13 ET by PopularTechMyth: Corn Ethanol is Great (Video) (5min) (John Stossel, 20/20)
- Ethanol reduces fuel economy by 30% compared to gasoline
- Ethanol cannot be transported in existing pipelines
- Ethanol would supply only 12% of U.S. motoring fuel even if every acre of corn were used
- Ethanol displaces only 2% of U.S. oil consumption
- Ethanol fires are harder to put out
Fuel Ethanol Cannot Alleviate U.S. Dependence On Petroleum (Science Daily)
The Ethanol Myth (Consumer Reports)
Test results: E85 vs. gasoline (Consumer Reports)
The Ethanol Fallacy (Popular Mechanics)
The Anti 'Man-Made' Global Warming Resource
And Other Myths
June 13, 2008 - 12:31 ET by JGsezDiesel has more energy per gallon/lb than gasoline yet few cars have diesel engines. Why? I know but then I'm an engineer. Indy cars have been running methanol for 40 plus years. In 2007 they switched to ethanol. See Honda engine. If gasoline is such a great fuel, why don't Indy cars use it? Could it be that it is not how much energy is in the fuel but how much you can burn completely?
Ethanol is less efficient when burned in an engine designed for gasoline. No surprise there. Put some diesel in your gas burner and see what your MPG is on diesel. After all, diesel has more energy per unit than gasoline. Burn ethanol in a high compression engine designed for ethanol and a good portion of the 30% would disapear or even surpass gasoline. Add in the cost of the unburned gasoline and ethanol would win hands down.
Those hick hay-seed farmers are smarter than PhD university professors. They feed the distillers grain to their livestock. Google "state university" +"distiller grain" and you will find out that distiller grain is up to 50% better feed than cracked corn.
Corn ethanol is harvested from corn used for feed not sweet corn or popcorn. Corn ethanol can NOT replace gasoline. Even ethanol from all sources can NOT replace gasoline. Nor can solar cells and windmills replace all electric plants. But I will wager there are thousands of processes that can harvest ethanol with no detriment to the current product or procces.
To check the increase in exports you can look at the USDA data. And if you believe farmers are planting wheat instead of corn, check this post.
I am all for Diesel Cars
June 13, 2008 - 22:42 ET by PopularTechHowever US emissions standards have effectively kept them off the market until recently.
The Case for Diesel: Clean, Efficient, Fast Cars (Hybrids Beware!) (Popular Mechanics)
50-MPG: 2009 Volkswagen Jetta TDi Clean Diesel (Popular Mechanics)
70-MPG: Volkswagen’s Polo TDi Clean-Diesel May Head Stateside (Popular Mechanics)
99-MPG: No Chance For American Volkswagen Lupo TDi Diesel (The Car Connection)
235-MPG: Volkswagen 1-litre car: Thin Car Travels Far (Popular Science)
Indycar used to run gasoline in the 60s and NASCAR still uses gas. Methanol has it's own problems:
- Methanol reduces fuel economy by 43% compared to gasoline
- Methanol is a colorless liquid (this requires fuels to be dyed)
- Methanol has inadequate vapor pressure for cold-starting, particularly in low ambient temperatures
- Methanol burns with a flame that is nearly invisible in direct sunlight (this is a safety concern as fires could start and go unnoticed)
- Methanol provides less lubricity than gasoline (this increases wear on various engine fuel system components)
- Methanol is extremely poisonous and prolonged exposure can cause blindness or death
- Indycar switched to Methanol in the 1970s because it was less explosive than Gasoline (Source)
One of Indycar's priorities is not fuel economy. Indy recently switched to Ethanol for PR reasons.
The reality is we do not have engines with high compression ratios designed for ethanol thus fuel economy will suck and if we did they could not run gasoline. Regardless without government subsidies Ethanol could not compete with gasoline at current prices. Even with the subsidies it is still more expensive.
The Anti 'Man-Made' Global Warming Resource
Thanks Yall
June 13, 2008 - 23:44 ET by kilrodThanks for all the tech info on fuel and energy. The original question was sorta about was ethanol the reason for the high price of corn. The answer to that is still no, it (ethanol) had a minor effect, but the main reason is worldwide demand, plus speculators, plus high energy, etc. There are numerous factors you have to factor in to the equation, but using corn for ethanol is only 1 of the smaller factors.
(GRINS) kilrod
Remember, only two defining forces have ever offered to die for you, Jesus Christ and the American Soldier
What? Ethanol production does not effect the price of corn?
June 13, 2008 - 23:59 ET by PopularTechI am missing the economic logic of burning corn for fuel instead of selling it for food and it having no effect on the price of corn. It is simple supply vs demand economics. Do ethanol producers really try to sell this bullshit?
No one has answered the question: If the government was not subsidizing corn for ethanol what would the corn be used for?
The Anti 'Man-Made' Global Warming Resource
Cattle Chow
June 14, 2008 - 00:07 ET by BlondeAnd we'd be eating very tasty, very inexpensive steaks.
Oh, how I wish!
David Gregory, do you know which damn network you lie for? ~ Uncle Jimbo, @Blackfive
Blonde,
June 14, 2008 - 00:22 ET by R D HelmHad a 2" thick bone-in ribeye tonight, along with grilled zucchini and corn on the cob.
Ummmmmm. :-)
The truth is insensitive. - Neal Boortz
Cheap steaks
June 14, 2008 - 00:36 ET by Cool ArrowActually they are about as cheap as they are going to get.
Ranchers are selling off their herds to avoid the high feed costs.
My guess is this time next year, beef will be probably 40% higher.
LYDSEXICS UNTIE
Ethanol Subsidy
June 14, 2008 - 08:37 ET by JGsezThe government does not subsidize corn for ethanol. It subsidizes the blenders - usually the refiners. This is true for any ethanol, even imported sugarcane ethanol.
The corn would be used for livestock feed which is what it is still being used for after the ethanol is harvested. Distiller grain is an excellent feed stock. Even better than cracked corn.
That is why Kilrod is correct. Corn ethanol has very little effect on food prices.
Chinese Corn Chowder
June 15, 2008 - 06:48 ET by kilrodNo one has answered the question: If the government was not subsidizing corn for ethanol what would the corn be used for?
It would be exported, the price would be just as high, and will go higher, not because of ethanol, but because of demand.
(GRINS) kilrod
Remember, only two defining forces have ever offered to die for you, Jesus Christ and the American Soldier
Alternate fuels
June 14, 2008 - 09:15 ET by JGsezDid Indy cars burn methanol for forty years for PR reasons? NASCAR and Indy cars are apples and organges. PopularTech's last link gives the answer to the gasoline / ethanol question.
Flex fuel engines should be required for all cars built in the US. And his links on the diesel engines shows what good engineering can achieve.
While Congress, and much of the US, wails and gnashes their teeth, the US Air Force is looking ahead. At some point between 60 and 90 dollars per barrel of oil, many alternatives become economically feasible.