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Veteran Advisor

Re: Historical observation/$7.93 at the Ethanol Plant for May?????

I certainly don't understand everything about economics of these markets (corn), but would someone graciously explain to this (not in the field-as much) guy how "another season of rationing" could actually discover lower prices..NOT ARGUING anything here---just want to know the facts.

 

thanks in advance!!

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Veteran Advisor

Re: Historical observation/$7.93 at the Ethanol Plant for May?????

Would that be a reference to "demand destruction", or perhaps substitution, or elasticity?  I think of "demand destruction" as the user no longer needs the product, assumes their competitors don't pick up the slack. Less demand, same supply, lower price.  I don't think we've really seen alot of that, just fears it could happen.  I guess a permanent substitution would also be considered demand destruction.  Otherwise, the affects are temporary -- less demand at higher prices, increasing demand when the prices drop, etc. 

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Veteran Advisor

Re: Historical observation/$7.93 at the Ethanol Plant for May?????

yeah, to me "more rationing" doesn't translate into less demand, same supply- otherwise - no need for rationing..............rather lower supply, same demand UNTIL prices discourage or bankrupt the needers of product.----again, anyone correct me if this logic or understanding is off balance. thanks!

 

always heard and thought of grains as being relatively INELASTIC commodities.

 

thx WCMO

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Honored Advisor

Re: Historical observation/$7.93 at the Ethanol Plant for May?????

We are seeing something we are not used to in the substitution between grains that may create new "elasticity" territory.  

Soft wheat being substituted for corn.  Milo being promoted for ethanol.

 

In at least some of the demand markets,  it may become a least cost input issue.

It will be interesting to see what the DDGs or WDGs feed like when milo gets in high usage for ethanol.  If the feed digestability is good and productive, can other grains be far behind.  Doesn't it become "whatever is in stock at the cheapest price.

 

Makes me wonder who is experimenting with spring wheat, barley or oats??

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Honored Advisor

Re: Historical observation/$7.93 at the Ethanol Plant for May?????

It is just a supply issue.  As long as supplies are tight all grains will benefit.  We are not going to see one go to $16 and another stay at $5.  We are finding out there are a lot of ways to feed demand.

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Veteran Advisor

Re: Historical observation/$7.93 at the Ethanol Plant for May?????

makes sense, sw...thank you

 

c-x-1

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Highlighted
Contributor

Re: Historical observation

My location is 100 miles north of Detroit we have a Poet plant 30 miles away their basis is the same as the local coop -15,  would like some of the locations that others are reporting on price and basis.

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Honored Advisor

Re: Historical observation

I am in the SW panhandle regions of okla, tx and sw ks.  We had an ethanol basis of +70 for april & May(those months have filled up for corn) and +.85 for june & july, +90 for august.

There is a lot of competition for corn here with a lot of fat cattle and hog production and a fair amount of Dairy.

 

Basis Report; Bids for delivery to Arkalon Ethanol. Subject to change at anytime. Call to confirm current bid''                       
Delivery Month:   March April May June July  August September October November December        
CBOT Basis Month:   May May May July July  July December December December December        
Snapshot: Corn covered covered covered 0.85 0.85 0.90 0.25 0.35 0.35 0.35        
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Senior Advisor

Re: Historical observation

Are they only bidding out thru August in hopes of getting some new crop delivered starting in September for a lesser amount?

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Advisor

Re: Historical observation

sooooooo . . . you know where the Hood Ranch is?  John

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