Corn, Ethanol, Food and the Big Disconnect

Technocrat

Corn, Ethanol, Food and the Big Disconnect

zogger

Wed Oct 01 08:53:00 -0700 2008

Politics.

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Numerous articles and opinion pieces are wailing about how food is so over priced because of corn ethanol, that the shortages have been caused by turning food into fuel and etc. Well, the new reports are out.

ed.z.: here is the relative tidbit that should squash that argument about corn ethanol costing people food this year, I bolded the number: As an indication of declining demand, old crop inventories for corn totaled 1.62 billion bushels as of Sept. 1, up 25% from a year ago, the U.S. Department of Agriculture reported Tuesday.. To make this more clear, that is last years crop *surplus* still sitting around in huge piles unsold, despite all the ethanol production. And for that matter, we have a huge amount of the ethanol that was produced being sold outside the US (guessing-because the big oil companies don't want to blend it). The food prices and shortages have been caused by massive speculation driving up the prices, *not* by supply constraints. The fuel shortages (almost all stations are completely out around here still, and when they get some it goes fast) you'll have to ask the oil guys.... we have enough surplus corn to make a big dent in that situation, if the ethanol was used more right now. Even bumping up the small percentage in the blends would help a lot.

Corn, Ethanol, Food and the Big Disconnect

TykeClone

Wed Oct 01 09:30:34 -0700 2008
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Imagine that.

I know most of the readers don't live in corn country, but you would not believe the size of the piles of corn that we have around here after harvest.

This year, however, will not be as good as previous years in terms of bushels per acre, so I'm sure that the 2009 carry out will be lower.

Corn, Ethanol, Food and the Big Disconnect

Thomas Lord

Wed Oct 01 11:51:59 -0700 2008
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Seems to me that a lot more corn was planted this year because the farmers were speculating on ethanol-based demand. That, in turn, means the price of other food-stuffs should go up. If you're telling me that there's now a huge surplus of corn, the speculators I'm looking at are the farmers!

Should we expect a positive impact on the price of icky corn-fed beef (not that I plan to start buying it...).

-t

Corn, Ethanol, Food and the Big Disconnect

Richard Sexton

Wed Oct 01 13:12:45 -0700 2008
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At this point anybody admitting to being a wall st speculator can, oh wait I don't think anybody would admit to it any more, they'll probably say they're something less, um, grotty, like an abortionist or something.

It can't sit well with the folks back home on the farm to know things have gone way way up by those boys that want a blank check to "fix things".

That is would you trust a drunk who broke a crystal bowl to fix it?

Corn, Ethanol, Food and the Big Disconnect

Matt T

Wed Oct 01 19:10:29 -0700 2008
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If I recall correctly, first their was flooding this year, then mild drought, to push up the price of corn. That was the reported news anyway. Eh, another bubble, maybe?

I wholly agree on the corn fed beef being inferior to grass fed.

Corn, Ethanol, Food and the Big Disconnect

mrjk

Thu Oct 02 15:22:06 -0700 2008
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Well there was always a disconnect between the "food prices are higher because of corn ethanol" and the "corn ethanol only gets 1.25 max energy over the petroleum products used to make it" arguments. Since farm fuel costs (in upper Midwest US) have doubled in the past two years and the price of corn for the farmer hasn't, something has to be radically wrong with one, or more likely both of those models. The reason being that corn prices would be driven by petro-fuel prices not usage as the first argument implies, and that cost of production should be almost linear with close to 1:1 slope in fuel prices at large enough production levels, and that doesn't seem to be happening either. The price increase one is likely more wrong.