Corn business booming thanks to need for ethanol fuel
Corn production is expected to go up 34 percent to 2.15 billion bushels, thanks to an increase in interest in ethanol, a fuel based on the plant. The bad news is that as demand has gone up, so has the crop's price, from $2.25-$2.65 a bushel, up from $1.95 to $2.05 last year. The amount of corn feeding the ethanol craze is 20 percent, up from just 5 percent a few years ago. Likewise, the demand for soybeans has gone up as well, thanks to an increased interest in soybean-based diesel.
[Source: BusinessWeek]
Reader Comments (Page 1 of 3)
Racer Jay 6:18PM (5/16/2006)
All thanks to the corn lobby pushing the use of relatively ineffecient corn-based ethanol.
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Aaron 7:20PM (5/16/2006)
I'd pay twice as much for this fuel if it made some American farmer rich as opposed to sending my money overseas. Not to say Exxon won't eventually come in and buy them all out anyway.
Also, nothing starts out effecient when its new and in small demand. Give it time. We need to explore all alternatives.
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Anthony 7:53PM (5/16/2006)
Does this mean that there will be less corn in my frozen mixed vegetable mixture?
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tbyron 8:14PM (5/16/2006)
You should note that this could have a very positive impact that a consistently higher price of corn will have on the annual cost of federal farm subsidies.
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JC Whitless 8:26PM (5/16/2006)
Well, considering the 1.95 price was the lowest price for corn in twenty years, this baseline they are using is inaccurate.
Also, with the cost of fertilizer and DX on the rise, it will take nearly $3 Bu to turn a profit and pay the outrageous property tax bill farmland is forced to pay.
They are building a new eth-plant near me, and it is forcing the price up due to the increasing demand of the asian markets for corn. The plant needs to run all the time to turn a profit, and to do so requires paying more for corn to get the trucks headed towards them.
I think its really a win/win for the US economy, at least the former oil money will stay here at home.
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gbh 8:53PM (5/16/2006)
It is a nice incremental, but as JC points out, a farmer loses his ass at under $3/bu. Throw in huge fuel price increases, as well the petroleum origin of much fertilizer product, the recent price spike is no windfall for the American farmer.
But, it's gonna be great for ADM.
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Francesco 9:28PM (5/16/2006)
Does this mean Any aotu will Run on 100% ethanol and will it be avalible on the North East coast.How much cheaper would it be.Thank you
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cassandra 10:03PM (5/16/2006)
I just want to know why america did'nt consider these
options way before now, because if we had we would not have outrageous gas prices now which makes life so difficult for your average family to keep up with.
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tom booty 10:36PM (5/16/2006)
the addition of ethanol,is too little,too late in holding down fuel cost in gasoline or diesel,nor is there enough of it today in use nationwide,and it will be several years before its impact is felt nationwide. we must look elsewhere for alternatives as well,such as oil shale,and possibly coke from coal,and other sources .
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Andrew 1:10AM (5/17/2006)
"I'd pay twice as much for this fuel if it made some American farmer rich as opposed to sending my money overseas"
I see this stated many times. Then we don't need huge federal handouts? Ethanol (as always) is more than gas, would go for about 3.50 per gallon retail, 2.80 wholesale. I'm sure Exxon (or any other business)
would like to sell you ethanol for 2X gas prices. Do you really think Exxon would sell much 6 buck /gallon ethanol?
"I just want to know why america did'nt consider these
options way before now"
"nothing starts out effecient when its new and in small demand"
The US has been subsidizing ethanol for about 20 years, and also has paid 10's of billions subsidizing corn farming.
Also there is fallacy that because mass production drives prices down anything can be made cheaply. Example: if we mandating making toilet seats out of solid gold we could eventually have affordable toilet seats. This reminds me of the EV mess in California, regulators claimed that automakers would magically make EV's cheaply.
"I just want to know why america did'nt consider these
options way before now".
Because ethanol costs more and gets worse mileage, and because we wisely have largely and wisely avoided centralized government control of the economy.
Think about it. Americans *say* they want to use less foreign oil, but their real goal is to push as many tons of steel down the road as cheap as possible. Using federal subsidies allows us to *pretend* ethanol is cheaper, but it is not. And there is no free lunch.
I think there *might* be some limited market for expensive ethanol. Heck people pay an arm and leg for a Harley because they want American product. But this market seems limited, and at any rate should not be subsidized.
I guess all the ethanol boosters and I agree on one thing: get rid of huge tariff on Brazilian ethanol.
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gbh 1:14AM (5/17/2006)
We didn't do it before now because it didn't make economic sense. It still really doesn't.
If we quit feeding the world, (and cut way down on our own food intake) we can run our lives on ethanol. I don't see that happening anytime soon.
Reality is, that ain't gonna happen. So, it will be piece of the pie, but never more than a small piece.
Don't forget, a whole pie is just a bunch of small pieces.
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lincmercguy 5:13AM (5/17/2006)
"If we quit feeding the world, (and cut way down on our own food intake) we can run our lives on ethanol. I don't see that happening anytime soon."
Most corn is used to feed cattle. Ethanol uses the starch in corn to create sugar, then ethanol. The leftover product still contains all of the protein it originally did. The cattle need the protein, not the starch. In fact, the leftover product from ethanol production is easier to use for cattle feed because it's already ground up. We would still use some corn for human food (I'm not talking about sweet corn here).
Also, we don't have to just pick one product to make ethanol. Sugar cane and sugar beets can be grown in certain parts of the country, those parts can grow these crops to create the ethanol for the region. In a decade or so, cellulose ethanol may also do a lot for ethanol production.
We are lucky in the US to have such a vast expanse of ground that can be farmed. Moving to ethanol will strengthen our country and save an industry in danger.
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jamie 11:09AM (5/17/2006)
Let's see, shall I fill up my tank or my tummy? Hmmmm
Ethanol will cost 25-50% more than you are currently paying for gasoline. On top of that, your mpg's will suffer 25% loss.
Good for the economy? Yeah, in a retarded way, I suppose. The money will fill the government coffers instead of the middle eastern oil barons.
Rob Peter to pay Paul syndrome.
Somehow though, I feel like I am a sheep being fleeced.
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Aki 1:01PM (5/17/2006)
Why can't people drop ethanol? It...
1) Uses 15% gas
2) 25% less efficient MPG
3) costs more
The only reason why anyone supports it is because it's GM's pet project. Ethanol demand hasn't gone up, it's more GM convincing various organizations to adopt it. Nobody in their right mind would go out and buy an ethanol car. And it's not getting cheaper or more efficient either.
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long Tran 2:32PM (5/17/2006)
Typical. We're just setting ourselves up for more disappointment in America. Corn based ethanol takes a tremendous amount of energy to process compared to soy or sugar.
If this country plans on moving to an ethanol based fuel, then we better look towards soy and sugar because corn isn't going to deliver on all the eco-friendly promises, not to mention corn ethanol is much more inefficient than its competitors.
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Non-Bizarro Adam 5:12PM (5/17/2006)
To all the people saying corn is bad, we should use soybean/sugarcane/ground-up-baby ethanol, it matters not right now. Fact: the US is really good at growing corn, and the government has to pay to keep prices high. If there is more demand for corn based ethanol, we can get rid of government subsidies for corn farmers, while keeping corn prices the same. We pay the same amount of money for the corn, but pay less in taxes (in reality, we'll probably just build another bride to nowhere, but that's another discussion entirely).
As demand for ethanol gets higher, more sources of ethanol will come online. Corn may end up not producing the majority of our ethanol, but if we are really good at growing corn, and not so good at growing sugar cane, maybe we should stick with what we're good at first.
And to those that say "But you get less MPG!" That is true, but if we can move to a point where E85 is widely available, we can design cars with higher compression engines, to take advantage of E85's higher octane rating, and therefore increase mileage (and hp, where most technological gains go nowadays). In the long run, its nothing but good things.
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WDP 9:40PM (5/17/2006)
It's not perfect, but at least it's a start. Anything that decreases our dependence on those goat-humping terrorists is fine with me.
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CE 1:15AM (5/18/2006)
To all that think that E85 costs more money than regular unleaded You are full of crap and probably have some vested interest in GWB's oil portfolio AKA Iraq's civil liberties! I have never paid more money at the pump for E85; in fact I have paid on average 30-40 cents less than for regular gas. In fact, you can easily make your own ethanol (its legal)and lower your costs to .72per gallon. Some of you rant and rave about less gas milage; well with the price differences of ethanol and regular you will still come out ahead when you fill up. Also, its nontoxic, biodegradable, water soluable, reuseable source, better for our planet, and most important of all, millions of innocent men, women and children will not die in order for us to have it.
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MikeW 2:22PM (5/18/2006)
Good luck trying to start the engine when the temperature is less than 0F with E85, not going to happen.
So the ethanol industry quietly switches to E70 for winter, is it marked as such? No. What is the cost of two different blends of ethanol/gasoling?
Even then E70 would only work reliably to -20 or so. Synthetic 0w-20 can -50F
Are we going to exclude Alaska and Canada.
The price at the pump is cheaper because there is massive subsidies and tax breaks, etc.
You say BUTA-, I say -NOL repeat.
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Tom 7:12AM (5/20/2006)
I realize I preparing to compare an apple to an orange, but I ran Methanol in a drag car and my fuel cost was 1.35 a gallon compared to over 4.00 per gallon for 104 race fuel.
Point
1-it took almost twice as much methanol to burn correctly but at less than half price, so what.
2-The car made conciderably more horsepower and torque, approx. 30 to 40 horsepower with no other changes. It would pick up the front wheels at 1 to 2 shiftdue to increased torque and ran cooler.
I know we make corn in this country, and could reduce our foreign dependence by maybe 10 to 20% in the near future and that can't be bad, don't make this a Ford vs. Chevy battle, its a oil vs. alternative fuel battle and the oil companies will be resistant until they get on board.
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