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Senior Contributor

Re: "Dangerous levels" of corn production?

Call it what you will, but I'd be very interested in someone showing me of any other U.S. produced good that receives: 1.  mandate  2.  subsidy  3.  tariff on foreign competition.  I realize there are loopholes with the tariff.  South America found one a few years ago where if they bought a gallon of jet fuel they could sell a gallon of ethanol tariff free.  The fools folly in all of this is the fact that we subsidize a mandated product.  I'd be willing to bet we're within five years of seeing one of two things happen and possibly both:  1.  ethanol mandate waived 2.  corn exports shut off.  The path we're on with regards to ethanol is unsustainable.  Without growing a record crop each and every year, we all but run out of corn.  It appears to me we're sacrificing our food sector for our fuel sector.  I'm of the opinion we do a better job with food safety than countries like China, Mexico, etc.  I'd rather import oil and fuel than food products.  If ethanol is the savior to our energy crisis, then we're doomed.   

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Senior Advisor

Couple of things

First you are correct that something is going to have to give if the rest of the world needs our excess, ethanol was a two pronged approach to a problem, one was to find a home for excess corn knowing the acres needed to be in production for what appears to be a shift in world needs (powerful position with far reaching diplomatic power, ie China), two is we have tied corn to energy.....we as a nation can not pay for a war twice, once with a military and second with oil purchases.....we need to find a way to sustain our energy needs within the confines of the North and South American continent and associated waters.....we need to wean ourselves off oil that comes from all other sources.

 

You are correct that ethanol is one of the few if not only things in history to be mandated, subsidized, and protected.......IMO ethanol can survive without credit and tariff, but it needs the mandate to maintain current demand, that said abolishing ethanol is not a light switch off answer.  We would likely only see a net gain of about half the ethanol "acres" as there would still likely be some demand for ethanol (possible export), and DDG's need to be replaced with something.......

 

Ethanol is not a savior, it does support our energy habit, it does support US jobs and revenue, it DOES NOT REQUIRE troops or fighter jets to patrol corn fields......is it the end all, no but I hope that we can transition from using some much imported oil to using natural gas, coal, alternative energies, nuclear....and right now ethanol is a part of that.......

 

If we were to pull the covers off the corrupt BS that happens between governments and oil you would find that oil is much more costly than the barrel we buy.....only then can this country get on with all these other energy sources I mentioned......of course we could pump the rest of the world dry first, then start tapping our continent potential....maybe that's the long term goal.....we are entering into a new era of resource "protection", and if the middle east wants to pump oil till they are dry, let em I guess....

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Veteran Contributor

Re: Oil. That simple,

call it what we will, but all those aircraft carriers we float around the Persian Gulf daily are an OIL subsidy.

 

Granted if the customer told the producer that buying the product was pointless lest the producer had some SAFETY of delivery built into the equation, the producers WOULD make sure that happened.

 

Persian Gulf countries just as tough as the usa is on protecting product sales if push were to come to shove on this.

 

Easiest for em to remain passive and let the usa govt pay it ( money never an object for usa...they'll just print more debt instruments to supposedly cover it later ).

 

 

Frequent Contributor

Re: "Dangerous levels" of corn production?

Gored,

 

I could be wrong, but how about sugar, seems like a reel cluster to me.

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Senior Contributor

Higher 2011 prices needed if shortage develops

I agree with the comment that unless the current inverted market changes to one that has a higher price for 2011 production, the market is telling us that there is not a supply problem except for surviving the next few months.

 

Maybe the patient sellers will be rewarded with a chance for $8.50 corn and $20.00 soybeans. Energy has been called to approach the $120 per barrel figure for oil by at least one group, and this would be in line with an increase to these price levels. Meat would have to quickly keep pace, or a pretty steep herd liquidation would undoubtedly take place.

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Veteran Contributor

Re: "Dangerous levels" of corn production?

I understand that grains are going up because of supply issues.  But what is the reason crude is going up?  Aren't inventories at very high levels?   

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Senior Contributor

Southern US Corn production

For the guys down south doesn't cotton pay better then corn today?   What about Soybeans vs. corn down south?   What I am going to expect is a drop in corn acres in the south with corn acres increase in the northern fringe of the corn belt, just like that guy suggested in an early post.  Better go buy potatoes caues i don't expect much of that with corn and wheat prices where they are. 

 

 

 

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Senior Contributor

Re: Southern US Corn production

There is considerable investment in car manufacturing in China nowdays.  Basic, inexpensive cars.  But, they'll all need fuel (and of course a place to park, but that is a different matter.)  The competition for energy will continue.

 

I don't raise corn for food or for ethanol or for export - I just raise corn and sell it.  The demand system can sort out who gets it and what they do with it.   The next few years - maybe the next few decades - are going to be very interesting.

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Frequent Contributor

Bad math

Gored, I am not good at math, but you are forgetting some major things in your formula.  Best I can tell, you are ignoring the byproducts feed value.  Roughly, 1/3 of the corn is left after removing the ethanol.  In the feed yard, less alfalfa, less soybeans are fed, and If I understand correctly, it takes cattle less days on feed. When you figure your acres used to grow corn for ethanol, you need to subtract the acres that would have been used to grow the alfalfa and soybeans.

 

The economy of Nebraska (I presume home state of both of us) has greatly expanded jobs because of ethanol.  I am not just talking the employees of the plants,   People like truck drivers, truck stop workers, grocery store clerks, new paint dealers and their employees.  When farmers make a little extra money, they spend some of it.   Looks like a much better deal than bailing out wall street  banksters.

 

It distresses me greatly when you, and others band mouth the ethanol subsidy.  It may be the only subsidy that does not cost the tax payer, but if I understand correctly, in fact lowers the expenses of the taxpayer.  From a economic point of view, why would one even consider eliminating the tax credit at this time?

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Veteran Advisor

Re: Bad math

Nebraska Sandhiller I completely agree with you. Its often times funny to watch livestock groups attack ethanol but the fact of the matter is it can stimulate the economies around an ethanol plant. DDG's are fed to livestock feeders around the plant at a cheaper price than corn (I think) so in a sense that same corn is being used twice. The big losers of ethanol are dairy producers in California that have corn shipped from places like Nebraska to feed their dairy herds. In the mid-west ethanol is kind of a win for most, I am not in favor of expanding the corn ethanol industry beyond its current level because I feel one day we could really be in a pinch for corn for human consumption. (That year could be this one) As I lock in prices of production and sales on my small farm I question whether Im doing the right thing in regards to sales. If we look at our current low corn and bean inventories along side a strong La Nina we could be in for a perfect storm of very high prices. It will make for an interesting year!