"Corn Prices Jump to Record $6 a Bushel, Driving Up Costs for Food, Alternative Energy
NEW YORK (AP) – Corn prices jumped to a record $6 a bushel Thursday, driven up by an expected supply shortfall that will only add to Americans’ growing grocery bill and further squeeze struggling ethanol producers. Corn prices have shot up nearly 30 percent this year amid dwindling stockpiles and surging demand for the grain used to feed livestock and make alternative fuels including ethanol."
Didn’t you tell me corn prices would be dropping and that ethanol demands couldn’t drive up corn prices?
More importantly, how is it that we have $100 per barrel oil and yet ethanol producers are still “struggling” even with subsidies?
I believe the answer is simply that ethanol is not an energy source when examined with the entire fuel cycle in mind. It simply doesn’t produce net energy and so will not be commercially viable at any price of oil. I am speaking of large industrial operations, not Ma and Pa Kettle using it on their farm to power their tractor.
There’s a reason I don’t play in the futures markets. The same reason you were too much of a wuss to even do a bet that would have benefited your charity.
I would have to get more information on these “struggling ethanol producers.” That doesn’t jive with what I’ve been reading of late. The only struggling I’ve seen is when dealing with financing. But I don’t live in that industry anymore, so I’m not up to speed.
Oil has hit $100 a barrel, increasing prices for everything.
Coal prices have jumped about 70% in the last year, the result being electric rate increases coming soon.
Steel prices have skyrocketed. Cement prices have jumped.
There was a story on the radio here in NC about farmers deciding what to plant this year. Even though corn prices are strong right now, most of them don’t have confidence that they will stay up there by harvest time. Plus, the cost of growing corn is pretty high. I also wonder about why someone in the NC climate would even consider corn, but that’s a different story. Most of them chose to go with soybeans. They would prefer tobacco, but that’s not really an option any more.
The oil industry execs were in Congress this week, defending the subsidies they receive from the U.S. taxpayers. By your logic that means that oil is not an energy source either.
As a sidebar, I’ll admit that I didn’t think the pricing turmoil would last as long as it has for ethanol. Of course, the whole market seems to be going batty right now. The market fundamentals on energy prices either weren’t accurate for decades, or they are out of kilter now. Outside of the crumbling value of the dollar, I can’t see a justification for the crude oil prices right now. But there they are. And crude oil prices impact every other energy source, including ethanol.
That was kind of a stream of consciousness response. Probably not helpful, but it has been that kind of week. I’ve been schooled by both vitus and big kahuna this week. On another board, the mean kids are making fun of my writing. I’m probably the only triathlete who’s only leg injuries come while swimming. I’m a Kansas fan in the land of the Tarhole (that’s a basketball reference). And now you attack me for ethanol. I think I’m gonna curl up in a ball and cry.
I know you can do a lot better than this, so please try again when you are in better form. OK, yes, the corn price question was just to bust your chops, but the ethanol question is very serious.
I have believed for years that, in industrial quantities, there is no or very little net energy production from corn based ethanol. If I am right, no price of oil would make ethanol commercially viable. I think the current situation is proving me correct, but I would like some verification from someone more knowledgeable.
Sigh - I think there was another thread on this topic this week or last, but don’t remember what it was about. Anyway, below is a link for a USDA study on the energy balance issue. They come up with 1.67 to 1, which means you get 67% more energy out of ethanol than you put in. In the study report, they make comparisons to the Pimentel studies that come to a negative balance, and explain why there is a difference.
This is probably a better study when you want to compare the various energy balance studies and why they are different, stuff like bushel per acre estimates and low heat value versus high heat value.
As it were, I’m not sure how you equate high energy costs to an energy balance. Dollars should be compared to dollars, and BTU to BTU. They aren’t interchangeable. Further, it is only in industrial quantities that the net energy equation is positive. At least in my opinion.
Not much better form, but you’ve got a couple of studies to mull over. You can probably find the Pimentel studies and make sure that the USDA studies represent his findings accurately.
I am pretty sure you have referred me to these or similar studies before. They were convincing at the time, at least in that I didn’t have any actually data that I could point to which would allow me to credibly say bullshit, like, say, the hurricane forecasts for the previous two years.
If the studies are accurate, you would think $100 per barrel oil would result in the ethanol producers sitting on gold mines. If they actually are producing real energy deliverable to the consumer, why aren’t we hearing about ethanol producers’ windfall profits? If $100 per barrel oil doesn’t do it, what price would?
So, I guess I am saying bullshit to those studies since the marketplace is providing the price signals that prove them wrong. Am I mistaken?
As I mentioned before, the idea that ethanol producers are struggling is counter to what little I have been hearing. Now, there was a rush of investors wanting to build plants everywhere. A fact of business is that a lot of those will fall through before they really get started.
We would have to dig down into the cost structure of ethanol plants to know what is going on. If they were smart, they should be making a fortune. Most of the smaller ones are farmer cooperatives, and they have a contracted price for corn that they pay to farmers. If they were able to buy for that contracted price, and then sell on the open market then they should be doing great (with the profits going to the members of the cooperative). If, on the other hand, they got backwards where they had to pay open market price for corn and for some reason provided a guaranteed ethanol sale price then those guys are taking it in the shorts.
Actually, it is even if you believe the studies. They say you put two units of energy in (which means oil) to get three units of energy out.
My guess it is that the reality is that it is closer to three units of energy or even more to get three units of energy out. If what I just said were not true, the producers would be making a fortune now. Instead, the increase in the price of their product is simply offset by the increase in the price of their raw material, which is oil. The corn is just a front to get the subsidies much like the dry cleaner store is a front to sell drugs or launder money or whatever.
This is kind of like the Big Dig in which a three billion dollar construction project was the front for twelve billion in graft.
Move the Iowa caucus to July and see what happens to the farm subsidies.
Biofuel in general, and corn-based ethanol in particular, are not a solution to climate change, and the latter is not even a solution to dependence on foreign energy supplies. But lots of people can make money off it, and politicians can be bought, so here we are.
Between the US dependence on grain-fed animals, the famine possibilities in the world (which is one reason a lot of US farmers are switching their corn to soybeans this year), crackdown on illegal immigrants (one of the largest tomato farms in the northeast US is not planting tomatoes this year, because he can’t get the labor he’s had for the past couple of decades), and a host of other issues, better fasten your seatbelts.
Considering many of my good friends are in the industry, most of them the best people, hardest working people I know, having you accuse them of graft and compare them to drug dealers and money launderers is enough to end my participation in this thread with you. I’m happy to provide what information or knowledge I can, but I’m just not interested in attributing nefarious purposes to my friends.
Considering many of my good friends are in the industry, most of them the best people, hardest working people I know, having you accuse them of graft and compare them to drug dealers and money launderers is enough to end my participation in this thread with you. I’m happy to provide what information or knowledge I can, but I’m just not interested in attributing nefarious purposes to my friends.
You’ve got access to the studies and evaluations.
At least he didn’t compare them to Nazis.
Actually, it is even if you believe the studies. They say you put two units of energy in (which means oil) to get three units of energy out.
So YOU say. Anyways, there is much more to the price of corn than the diesel fuel used to plant and harvest it. I’m thinking that you should stick with your current job and leave the farming to farmers.
**My guess it is that the reality is that it is closer to three units of energy or even more to get three units of energy out. **
Why should anyone care what your guess is when your guess contradicts the experts?
The corn is just a front to get the subsidies much like the dry cleaner store is a front to sell drugs or launder money or whatever.
You’re the best detective EVER. Seriously, you should go to Congress and let them know what’s going on.
Considering many of my good friends are in the industry, most of them the best people, hardest working people I know, having you accuse them of graft and compare them to drug dealers and money launderers is enough to end my participation in this thread with you. I’m happy to provide what information or knowledge I can, but I’m just not interested in attributing nefarious purposes to my friends.
You’ve got access to the studies and evaluations.
You shouldn’t confuse the intent of the foot soldier with the intent of the 5 star generals.
I only skimmed the thread, Art, but I tend to agree with you that corn is a waste of time (though further research into it is worthwhile). For bio fuels they need to turn to sugar cane. Hybrid elcetric and/or fully electric transportation seems to be a more viable and pracitcal route. This includes increased public transit, better planned communities, and electric cars powered off of hydro, solar, wind, and nuclear energy.
