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Advisor

Two things

1. Does the govt subsidize crop insurance indemnity payments or just the premiums. Just wondering how deep the insurance companies pockets are.

 

2. How many bu of corn are needed to satify the MTBE replacement in gasoline and is there a replacement besides ethanol for an oxgenator??

 

This drought wil have profound affects on smaller coops and elevators as they need bushels to generate income.unless they are diversified.

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16 Replies
Advisor

Re: Two things

good Question.  What would the worst case scenario be for corn production??? What if the US produced a sub-8billion corn crop??? sub 7??? How much of the domestic economy relies on corn production?? How much of the world economy?? What is the condition of the seed crop for next year? In the interest of full disclosure, I was one that told MT that a 14 billion bu. crop was attainable.

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Veteran Advisor

Re: Two things

Just noticed that the apples are getting ripe about two months early this year, and maybe 1/3 as large as they should be. I would not bet my life against a 1/3  corn crop....I hope not, but my sweet corn just wilted on pretty heavy ground.

 

 

I remember 1988 ...how my corn crop looked good until MN state fair time, and then faded away to about 80 bpa as no rain fell for us. This was on heavy ground, too....stuff that was normally too wet if anything.

 

Soybeans went under 30 as the mites got them...this year I have the lorsban ready to spray so maybe we will get good beans yet.

 

Corn is still salvageable but it is getting to do or die time.

 

I know this...if the corn crop does come in at 1/3 it will not be "business as usual".  Corn will have to be allocated, hopefully by free market action, but what really is free about todays markets?

 

We got here by government decree...we can very easily get to where it is we have to go by government action too......When you get into bed with government , don't complain later when you get................

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Veteran Advisor

Re: Two things

From what I have been able to find, the amount of ethanol needed for oxygenate purposes would be about 3 billion gallons, max.

 

So, a little over 1 billion bushels of corn...and we're using almost 5 byn bushels of corn for ethanol now

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Contributor

Re: Two things

Everyone call your congressmen and senators and tell them how the ethanol mandate has to be slashed for the good of the economy.  The corn crop is getting worse and the only way we can stretch out supply is by gutting the ethanol mandate.

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Honored Advisor

Re: Two things

The EPA could do anything it jolly well pleases on ethanol, it could drop the 10% down to 5% and boom! 2 billion more bushels of corn appears.  If E-85 is less than 50¢ cheaper than regular unleaded, E plants could economically decide to drop that production.  The only thing is, if ethanol is cut gasoline could rise as much as $1 higher which would make ethanol look better again.  Also if there`s less DDGs and cake, feeders would have to buy corn or wheat for their rations.  With crop insurance, my guy said that insurance cos buy insurance on their insurance, perhaps a lesson learned from the "Chubb Group" debacle?   ...I`m lookin` at NCIA`s accuweather forcast and it ain`t purdy for 25 days.  We were promised 4/10ths and got nothin`, I went on I-90 Albert Lea to Roch and yesterday AM and there were freaking puddles on the roadside..dang I`m ticked, no not really but we could`ve used a taste.  On the way back Decorah on west highway 9 it`s burnin` up.  just 30 mi or so south of I-90.  What everyone needs to do is select a few choice ears and carefully peel the husks off and shake the naked ear and see the silks that stay attached ...those attached silks have kernals that aren`t pollinated.  A nice lookin` field could have 30% incomplete, unpollinated ears.  That my friends is scary, 30% off a 12 billion bushel crop? well, you do the math.

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Veteran Advisor

Re: Two things

you can get puddles on the roadside from a tenth of an inch of rain or less......it was spotty here where I live and one town got .17, five miles away, nothing.....ten miles away for about two miles was a soaked gravel road, probably something, not a lot though.

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Advisor

Re: Two things

Thanks for the info Ray.

 

So as a congressman or woman what do you do . Take away some ethanol and the price of gas goes higher. Keep it there and food and feed goes higher. At what point is national security affected. These will be trying times. Sure corn is a renewable form of energy if it rains.

Now what??

 

Most farmers that have insurance will be fine, USDA Sure program is probably on the way, however the damage will be far reaching , buyers, end users, consumers etc.

 

Look at the cotton market went from 2 bucks a pound to .65 cents due to lost demand. Is that what we have  coming??

 

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Advisor

Re: Two things

I am not saying this way or that but......If you look at total fueld production, the ethanol is a drop in the bucket considering total gasoline usage globally.  we are talking parts of a percentage total global usage.

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Veteran Advisor

Re: Two things

I think the ag industry needs to figure this out sooner than later.....price may solve a lot of it, but we've never dealt with a mandated demand segment before, either....

 

the ethanol industry in 1996 was a non-factor when comparing it's size vs. the gasoline industry.....but it took until almost mid-summer to get most of them shut down and get a big price response in ethanol......completely different situation this go around...

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