Posted on 11/04/2006 11:30:06 AM PST by thackney
The booming ethanol-fuel industry is rewriting the rules of the Midwest economy with big implications for everyone from consumers and food executives to farmers.
Over the summer, the corn-to-fuel industry was experiencing windfall profits as the price of oil soared. Those outsize profits have since retreated to more moderate levels, cooling the fever for the stocks of producers such as Archer-Daniels-Midland Co. and snarling some initial public offerings.
But the ethanol industry's continuing expansion and its ravenous appetite for corn are helping ignite the biggest bull market for grain since the 1970s, when the former Soviet Union suddenly emerged as a huge customer.
The price for corn -- the nation's No. 1 crop and one of the most ubiquitous ingredients in the American food supply -- has jumped nearly 55% since mid-September, when U.S. corn farmers began harvesting their third-biggest crop ever. Grain prices usually slump to their lowest levels of the year during the harvest season. Yet the price of corn in recent weeks has shot through the rarely breached $3-a-bushel mark and appears headed higher.
"The consequences of ethanol are the biggest thing going on in agriculture today," says Keith Collins, chief economist of the U.S. Agriculture Department. "We are talking about a higher new benchmark for corn."
The prospect for a new plateau in corn prices represents a shift in the balance of power in the farm sector. It also portends headaches for global food producers, which have benefited for nearly a decade from an abundant and cheap supply of ingredients made from U.S. crops, such as corn.
...
The trend is bruising some livestock farmers. Dairy farmer Mike Aardema, who milks 4,000 cows near Burley, Idaho, says the corn rally is increasing his livestock feed costs by hundreds of thousands of dollars a year.
(Excerpt) Read more at online.wsj.com ...
This isn't entirely due to ethanol. The price of wheat and other grains is also high, due to a prolonged drought in the producing regions.
but...but...next year not enough corn to feed cattle and hogs; therefore, beef and pork will skyrocket!
Thank you. After your note a quick look at charts for wheat, soybeans and oats all have similiar curves.
http://www2.barchart.com/mktcom.asp?section=grains
"...U.S. corn farmers began harvesting their third-biggest crop ever."
Droughts don't normally result in big yields.
The farmers better enjoy this while they can. As these "windfalls" continue to roll in, the DemocRATS will start attacking them and referring to them a "BIG corn."
How much in federal subsidies are corn producers receiving?
And the greenies will cry and weep about so many pine trees in the tree farms being harvested and the land converted (back) into corn fields (again).
>>This isn't entirely due to ethanol. The price of wheat and other grains is also high, due to a prolonged drought in the producing regions.<<
And energy cost for corn farming are a significant portion of expenses -and they are up.
When more acres are planted, bigger crops are harvested. Corn acres have increased.
Wasn't that Billy Carter's Indian name?
No kidding. I grow corn and wheat, and the expenses for corn are far higher, although both are signifigantly up.
Numbers?
OH - it's a radical idea...
>>>but...but...next year not enough corn to feed cattle and hogs; therefore, beef and pork will skyrocket!
Not really. You see, there are other products that result from the production of ethanol. One of them happens to be animal feed. It's not "food OR fuel" it's "food AND fuel".
>>No kidding. I grow corn and wheat, and the expenses for corn are far higher, although both are signifigantly up<<
Your a farmer? Very cool. What do you think about expanding ethanol to other biofuels - the President is talking about increasing ethanol production by a factor of 10 or more - is there any way to do that with corn?
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