- Agriculture.com Community
- Announcements & Forum Help
- Farm Business
- Young & Beginning Farmers
- Cattle Talk
- Crop Talk
- Hog Talk
- Ask the Agronomy Insider
- Machinery Talk
- Machinery Marketplace
- Shops, buildings and bins
- Ask the SF Engineman!
- Computers & more
- Precision Agriculture
- People & Rural Life
- Ag Forum
- Women In Ag
- Agriculture.com Blogs
- Your Farm in the Future
- Women in Ag: Lisa Foust Prater
- Women in Ag: Brenda Frketich
- Women in Ag: Anne Miller
- Women in Ag: Jennifer Dewey
- Women in Ag: Talkin' Turkey with Lara Durben
- Women in Ag: Heather Lifsey Barnes
07-30-2012 05:08 PM
What does that mean? Do ethanol plants have to produce that quantity regardless of price? If an ethanol plant shuts down does it have an obligation to supply ethanol to the market. Do the plants sign on to a contract to produce at least so many gallon. Is a mandate a goal or a binding requirment?
07-30-2012 05:22 PM - edited 07-30-2012 05:23 PM
I believe it is on the other side of the aisle. To sell Gasoline it is required to have an oxygenate in it, used to be MTBE till everybody got sick or it contaminated the enviroment. (bad stuff) Ethanol is a less toxic product to do that and has replaced it. It does not require a 10% mandate blend to meet the clean fuels act though. The 10% was one of the two things that got the ethanol industry up and running.
5% will do the job. But there are now all the unintended consenquences othat shuttering the ethanol industry down would impact. Starting to be a catch 22 deal.
If anybody has a better handle on this please correct me.
07-30-2012 05:29 PM
That is the way I understand it, that fuel must have a certain amount of oxygenate in it. I also think States can make their mandate more stringent than the EPA, but not more lenient, which is why a few states like California can have their own specs. I also do not belive that it has to be ethanol that is used, but with MTBE not allowed any more, it is probably the only game in town, that can be had in large enough quantities, to do the job.
I also think the 10% is not required in all States, but is more or less just a standard used. For example, in Nebraska, 'super' unleaded, is assumed to be 10% ethanol.
Just think, this spring, they were kicking around the idea of allowing 15% ethanol in the 'super', for all cars, to use up the surplus piles of corn, and now, there are thoughts of how to get enogh corn to last until harvest of 2013.
07-31-2012 06:25 AM
Don, I would be interested to know the average acquisition cost, for corn,of our local ethanol plants?. I keep hearing about people that sold substantial amounts of corn ahead for in the 5's. One midwestern farm management firm has 50% (or what they thought was 50%) of their clients production sold in the low 5's. I suspect the e-plants are well educated in risk management and have forward production contracts to fill at profitable levels. I've also heard that ddg's are going for 80-90% of the cost of the corn to produce it. if this is true, ethanol is the by-product and ddg's is the leader. Maybe for the next 6 months ethanol is still viable.
07-31-2012 09:09 AM
Ida...don't understand what you saying...
2.8 gallons x $2.50 == $7.00
17 # DDGS @ $300/TON == 2.55
take DDGS to $400/ton and it's still just half the value of ethanol produced
maybe I am missing something??
07-31-2012 04:29 PM
Figuring corn price per ton:
36 bushels in a ton (well, a little less, but I like round numbers)
times $8 a bushel = $288 per ton
DDGs, last I heard were a hair over $300 a ton (which was a little while ago, so it could be anywhere by now, but that is what I have to work with).
A friend of mine works at the local E-plant, and he said that their ethanol contracts, are about paying the expenses for running the plant, considering much of their corn was contracted in for $5 to $5.50, and that most of what they sell the DDGs for, is their profit.
(Or, in another way of saying it, if they take the value of the ethanol they sell, and subtract the corn they buy, and day to day expenses, they more or less zero out, and whatever the DDGs bring, is almost all profit.
When their contracts run out in August, and they have to pay going price for corn, I wonder what they will do.
08-01-2012 05:50 AM
Ray, I guess we're making assumptions and you are right. Any well run manufacturer, particularly one that involves commodities, would have some type of risk management inplace. I guess what i'm saying is "i wonder what the average acquisition cost is". My other contention about the ddg price versus corn price is taken from some ananlyst i heard on a radio segment. Does every well run e-plant hedge(?) or pre-sell ALL their ddg production??? I also wonder about the unintened consequences of shutting down many eplants would effect the feeding of corn vs. ddg's. I talked to one cow/calf guy that was hoping to winter his cows on low quality hay and ddg's. Remember that we are just some halfwit farmers....