High Demand Causes Surge in Corn Prices (ethanol/energy-related)

Las Vegas Sun ^ | 12 Jan 07 | Libby Quaid

[xzins]

High Demand Causes Surge in Corn Prices By LIBBY QUAID ASSOCIATED PRESS

WASHINGTON (AP) - Ethanol plants and foreign buyers are gobbling the nation's corn supplies, pushing prices as high as $3.40 a bushel, the Agriculture Department said Friday.

Farmers haven't seen prices this high for more than a decade. The monthly crop report forecast even better prices than in December, raising the estimate 10 cents to $3 to $3.40 a bushel.

Robust prices have made corn more expensive for livestock feed and as food for people. But a drop-off in those uses was more than offset by growing demand from foreign markets. Exports are forecast to claim 2.25 billion bushels of corn from last year's crop, up from last month's forecast of 2.2 billion bushels.

Overall, the corn crop came in at 10.5 billion bushels, slightly under last month's forecast of 10.7 billion bushels. Anticipated yields were 2.1 bushels lower per acre, and the area planted and harvested was slightly smaller than expected.

The amount of corn used for ethanol, forecast at 2.15 billion bushels, was unchanged from last month.

Nationwide, supplies of corn are expected to drop to 752 million bushels, a drop from last month's forecast of 935 million bushels and a steep decline from last year's supply of 1.967 billion bushels.

[Mr. Lucky]

Seed corn is hybrid. If you save the corn to re-plant, what you will harvest the second time around will bear very little resemblance to the original breed and the yield will be substantially smaller.

[mmyers]

I disagree, my dad has used his corn with very little difference.

[Mr. Lucky]

I don't mean to question your memory, but well over 95% of all corn planted in the united States is hybrid, with a resulting yield improvement in the 35 - 40% range over open pollinated seed.

Open pollinated corn is only planted as a specialty corn or where someone is really living off a trust fund and is trying to prove some social point.

[xzins]

You can replant with heritage seed.

[thackney]

Really good post

BTTT

[Keith in Iowa]

>>>Feed for livestock is a different issue. There's barely a middleman in that transaction.

Are you aware that one of the primary co-products of the ethanol creation process is animal feed?

[CPT Clay]

You tell em

[xzins]

Yes, but the issue is the price of corn rising because of demand. It would be nice to see dual use, and that should lower the price somewhat, but my understanding is that the alcohol is a byproduct of the organism feeding on the sugar in the corn. Am I wrong?

I'd think that the second use of the corn would be less nutritious than the initial.

[Keith in Iowa]

>>>>It would be nice to see dual use

It's more than nice - it's a fact of the industry. Multiple, viable, economically valuable products come out of the ethanol production process - not just the ethanol.

The wet-milling process:	The dry-milling process:
31.5 pounds of starch	10 one-lb. boxes of cereal
or	and
33 lbs. of sweetner	15 lbs. of brewer grits (enough for 1 gal. of beer)
or	and
2.5 gal. fuel ethanol	10 eight oz. packages of Cheese Curls
and	and
12.4 lbs. of 21% protein feed	1 lb. of pancake mix
and	and
3.0 lbs. of 60% gluten meal	22 lbs. of hominy feed for livestock
and	and
1.5 lbs. of corn oil	0.7 lbs. of corn oil
and	and
17 lbs. of carbon dioxide	17 lbs. of carbon dioxide

The corn oil is used in producing food for human consumption. For example, 1.5 lbs of corn oil from a bushel of corn is equivalent to 2 lbs of margarine. The 21% protein feed is used in making high protein livestock feed. The carbon dioxide is used as a refrigerant, in carbonated beverages, to help vegetable crops to grow more rapidly in greenhouses, and to flush oil wells. Only the starch of the corn (carbon, hydrogen, and oxygen) is used to make ethanol.

[Keith in Iowa]

The above is in reference to one bushel of corn...

[Hoodat]

High Demand Causes Surge in Corn Prices

Duh. Did leftists really not see this coming? Are they really that inept when it comes to basic economics? Next they will be telling us that mandating Californians to purchase medical insurance (increasing demand at the point of a gun) will somehow result in lower insurance rates. Oh brother.

[xzins]

Good list. Thanks.

[TKDietz]

Thanks.

[GVnana]

Wow! Thank you for the eye-opening post. You enlightened me!

[M. Espinola]

The grain market in general is heading toward the early summer of 1996 life time record highs. Corn is king.

Ethanol inflames grain market: Corn, wheat prices hit daily maximum

[SunkenCiv]

Note: this topic is from January 12, 2007.

Thanks xzins.

Overall, the corn crop came in at 10.5 billion bushels, slightly under last month's forecast of 10.7 billion bushels. Anticipated yields were 2.1 bushels lower per acre, and the area planted and harvested was slightly smaller than expected. The amount of corn used for ethanol, forecast at 2.15 billion bushels, was unchanged from last month. Nationwide, supplies of corn are expected to drop to 752 million bushels, a drop from last month's forecast of 935 million bushels and a steep decline from last year's supply of 1.967 billion bushels.

Remarkably enough, ethanol was made from more corn than was actually produced. /s