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Veteran Advisor

Is Corn Price Sustainable Without Ethanol Subsidies?

http://farmdocdaily.illinois.edu/2016/11/us-corn-ethanol-market-past-and-future.html

 

The University of Illinois suggests that without policy support, the recent corn price may be unsustainable.  

 

"

  • This price increase increasingly looks unsustainable as yield growth returns to a path closer to history and ethanol growth returns to a level more consistent with long term organic growth due to market incentives, not policy factors.
  • If the preceding point holds, agriculture will need to make painful adjustments as it enters a world that will likely look more like 1980-2000 than 2005-2010."

Ouch.  There have been a lot of farmer financial decisionsn made in the last half dozen years based on the "new" level of corn prices.  I don't want ever want to see corn with a 1 or even a 2 in front of the price.

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11 Replies
Senior Contributor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

corn is 2.82 here in ND

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Honored Advisor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

Do ethanol plants get any subsidies that any other business doesn`t get?  They have the mandate that without, big oil would use MTBE as a carcinogent.  I think a 15% mandate of ethanol would be good, each ethanol plant is basically a little refinery, something that oil companies don`t want to build.

 

With the rising dollar, it`s time to batten down the hatches.  I heard a quote today "It takes a farmer 2 years to realize that he`s out of money"....well I realized I was out of money 2 years ago   Smiley Happy

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Advisor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

As noted back in 2005, all farm policies ultimately fail, it is just a matter of moving on to the next one. This had to be expected, actually took a bit longer than it might have due to the '12 drought. Things like that do and will happen.

 

Worth noting that these are historically high prices but costs got totally out of control during the boom.

 

I imagine we're stuck with LDP lite- probably freshen up the rolling price averages in the farm bill a bit and move along.

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Advisor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

the landscape could change IF Uncle decides to change the usa pro corn policies.

 

long as crop ins stays, well ok, kinda looks like corn has a bottom now thus E keeps rolling too.

 

darn land could get cheap enough to cause ALL kinds of Ills in the farmbelt IF Uncle shifts gears down on corn.

 

probably best to keep the social corn teats full of milk...even for Uncle LOL.

 

 

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Advisor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

I'd actually like to see a countercyclical ethanol policy proposal. But it is complicated as the thing got passed through the backdoor EPA method.

 

Guess when they abolish the EPA they could rewrite it?

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Veteran Advisor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

Jim  -   Guess  we   will  find  out  and  maybe  our   Nebr. , Iowa, -  D C  Beltway  reps  will  keep  us  posted  ? ?     

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Veteran Advisor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

Big oil will never get to use MTBE.  The environmentalists would be on them like stink on a dead hog.  Not a chance.

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Veteran Advisor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

Which  brings  up  the  question  -  environmentalist  sometimes  friend - sometimes foe  -  so  be  careful  when  the  statements  made  to  fold  up  the  E  P  A ?

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Advisor

Re: Is Corn Price Sustainable Without Ethanol Subsidies?

There's nothing technically magic about 10% ethanol- it is a number that was originally drawn out of thin air.

 

You can do 8-9 in a theoretical pinch and nothing much is going to change- just work the shoulder blend seasons in a little.

 

You can also do 11-12 and likewise- most everything that's on the road will run fine.

 

What I think doesn't matter but the industry shouldn't get more if its not willing to do with less in case of extreme tightness.

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