Corn prices hit an all-time high price of $6.025 per bushel yesterday, then settled to a not-much-better $6. Ethanol producers are feeling the hurt, as the corn they use now costs more than they're currently getting for the ethanol they make from it. Earlier this week, Michael Jackson (no, not that one– the president of Syntec Biofuel) explained: "For years, corn was cheap and fermentation processes for ethanol production came to completely dominate the biofuel industry in North America. Now, with corn prices well over $5 a bushel, corn ethanol economics have gone out the window." That isn't slowing the ethanol producers though. The American Farm Bureau Federation estimates that about 20 percent of last year's corn crop went to ethanol production and predicts that'll go up to 30 percent for the next crop year. With 147 plants in production and another 61 planned, the situation will only get worse. In the meantime, corn growers are reaping record profits while consumers can expect higher prices for anything that's corn-based. Sounds vaguely familiar, doesn't it?
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I dont like many corn based foods anyhow. Although pound cake is good. Corn oil for cooking often has heart stopping trans fats.
Frank: “consumers can expect higher prices for anything that’s corn-based.”
Not only corn based, but all agricultural products, because more land is being used for corn.
Food-oline is just a bad idea. Can’t make near enough to make a difference in oil dependency, it gets lousy mileage and at least one study has concluded its a worse deal for green house gases considering the use of oil based fertilizer, diesel to farm it, etc. And we subsidize it to boot. About all we’re missing is the sure-to-come study about its carcinogenic effects…..
DearS – wottsamatta u? Corn chips is a major, some say the major, food group.
I guess the silver lining is that high corn prices will decrease the use of that nasty tasting high fructose corn syrup as sweetener.
So, when do we get around to blaming Haliburton for this as well?
DearS,
Four words (as carguy says)…
High
Fructose
Corn
Syrup
Doesn’t matter if a food is corn-based or not. HFCS is in 70% of the food-stuffs on your grocers’ shelves. Is it good for you? Absolutely not.
But the fact is, corn prices affect the cost of every food product due to its HFCS content, regardless of whether you like Corn Flakes, corn biscuits, corn fritters, corn on the cob….
And don’t forget corn-based protein, either. Whataya think the makes up the base for the feed those cows, chickens, turkeys and pigs eat?
I would almost be for the use of corn to produce ethanol if I could be assured that it would result in Coke going back to cane sugar instead of corn syrup to sweeten their drinks that are for sale in the US (Mexico still uses cane sugar). For now, at least, I still think it has no redeeming value.
Before I forget, this book is worth buying or checking out — as we all wrestle with the Corn as Oil, Oil as Corn argument:
The Omnivore’s Dilemma, by Michael Pollan.
An exerpt of a review from the Washington Post:
The first section is a wake-up call for anyone who has ever been hungry. In the United States, Pollan makes clear, we’re mostly fed by two things: corn and oil. We may not sit down to bowls of yummy petroleum, but almost everything we eat has used enormous amounts of fossil fuels to get to our tables. Oil products are part of the fertilizers that feed plants, the pesticides that keep insects away from them, the fuels used by the trains and trucks that transport them across the country, and the packaging in which they’re wrapped. We’re addicted to oil, and we really like to eat.
Oil underlines Pollan’s story about agribusiness, but corn is its focus. American cattle fatten on corn. Corn also feeds poultry, pigs and sheep, even farmed fish. But that’s just the beginning. In addition to dairy products from corn-fed cows and eggs from corn-fed chickens, corn starch, corn oil and corn syrup make up key ingredients in prepared foods. High-fructose corn syrup sweetens everything from juice to toothpaste. Even the alcohol in beer is corn-based. Corn is in everything from frozen yogurt to ketchup, from mayonnaise and mustard to hot dogs and bologna, from salad dressings to vitamin pills. “Tell me what you eat,” said the French gastronomist Anthelme Brillat-Savarin, “and I will tell you what you are.” We’re corn.
Cane sugar? Is that why good old Coke tastes so much better in Mexico? I thought it was the glass bottles. In Mexico I’ll take Coke over beer at lunch every time.
Corn ethanol industry imploding on itself? Obviously needs more subsidies, to get this infant (only around since Noah got out of the ark) industry!
Any bets on how long before the first farm state sentor (of the 48) calls for increased subsidies?
We need an ethanol boondoggle deathwatch series.
The reason that cane sugar is not used in the USA is the government sugar boondoggle. The government provides all kinds of ways to protect the cane sugar.
Funny how when crude oil prices go from $30 to over $100/barrel no one resents it. Even when the biggest beneficiaries are Saudi Arabian sponsors of terrorist attacks on the United States.
But if the corn price goes from $2 to $5 or $6 then the lowly farmer is resented for raking it in. Strange how some Americans would rather buy from billionaire Saudi Wahabists, Hugo Chavez or even Saddam Hussein before American farmers. Farmers aren’t suppose to resent that though, I guess.
Of course spending hundreds of billions on a failed war in Iraq for oil security is not a boondoggle. It’s money well spent if we can just have a little more oil. Trouble is since the invasion Iraq has been consistently producing less not more. That’s not a boondoggle?
I sold corn straight out of the field for $3.25 a bushel in 1973. What is $6.00 corn in 1973 dollars? I was paying about a quarter a gallon for diesel then. A 125 horsepower JD was $14000. Compare those prices to now!
The farmers selling corn today stored that corn for over six months and many paid interest on loans as well as storage until now on that corn.
Anyone on this forum being paid only twice as much for your products or labor as you were in 1973? If so I imagine you are convinced we are in a depression!
97escort: “since the invasion Iraq has been consistently producing less not more” From a BBC (one of America’s harshest critics) report in December 2007: “Iraqi oil production is above the levels seen before the US-led invasion of the country in 2003, according to the International Energy Agency.” Quite an accomplishment considering what Iraq’s enemies have done.
Now, to return to topic.
tgrfan2: “What is $6.00 corn in 1973 dollars?” Inflation indices say it’d be $1.22 in 1973 purchasing power. You said you sold corn in 1973 for $3.25 a bushel. On average, it cost $15.94 to buy in 2007 what cost $3.25 in 1973. This calls to mind the old joke about the farmer who learned he’d won $1,000,000 in the Irish Sweepstakes. A reporter asked the farmer what he’d do with all that new wealth. “Keep farming until THAT’s gone, I guess,” the farmer replied.
Sid Vicious: “Cane sugar? Is that why good old Coke tastes so much better in Mexico?” A few years ago RC Cola make a limited run of soda pop using the original formula with cane sugar. I tried a bottle and it practically knocked me over. No wonder it seemed like pop was so much better when I was a kid.
My dad had bought a 100 HP JD in 1967 for $8K. In the middle of the Farmer Carter fiasco I priced another one with 10 more hp. Considering the difference in the interest rate from 1967 to the Carter days, that tractor would gave cost me 7 times as much financing it for 7 years. Luckily Carter didn’t last seven years!
That brought out the “Carter” JD. It had no steering wheel or seat. It was for the farmer that had lost his rear and didn’t know where to turn!
The funny thing about 10% Ethanol is that it does little more than raise octane (and provides some oxygen to lower emissions); it adds no real energy value to gasoline.
Which makes me wonder — wouldn’t a properly-executed water-injection system actually do as well?
Not that I have anything against farmers, but when that “farmer” is ADM, the E85 “push” takes on a whole new stench.
Raising octane along with being less hazardous than the additives that polluted California ground water is a big plus IMO. I was surprised when a friend told me his Mini Cooper required premium fuel. Another friend’s Caddy requires it too.
I even had a V6 Dodge pickup that got better mileage on mid grade several years ago. Advancing timing has always been a plus for fuel economy. It even works on diesels where I have run B20 for over 2 years now because of higher cetane rating. Even though the BTU rating for B20 is lower, I have found it gives better fuel economy in the winter than winter #2 and the same or slightly better economy in summer.
I like Cornbread, Corn-flakes, Tortias, and sweet corn.
Corn has been at around $3 per bushel for a long time but it depends on the type of corn. Ethanol corn is different than edible corn.
“Corn has been at around $3 per bushel for a long time but it depends on the type of corn. Ethanol corn is different than edible corn.”
No it’s not.
Where do they think this stuff up?
Whats E85 supposed to do again? Raise food prices and lower fuel mileage? Can we taxpayers finally stop paying huge subsidies to farmers yet?
The individual and industrial consumers are the ones being subsidized. When markets are allowed to operate freely supply and demand will dictate a fair market value for products. When President Nixon lifted the gold standard from the dollar prices increased and American farmers were allowed to produce for the world market.
I made more money then without “subsidies” than any other time. Especially during the famous embargoes which broke many farmers while making huge grain companies rich supplying our grain to Russia and Japan through Europe. Those embargoes came on the heels of Ford and Carter encouraging grain production for the world in a food for oil/peace scheme.
Subsidies have always been a means to control supply to ultimately keep food prices low. Compare agricultural commodity prices to any others since WW2. In the 1970s an 80-90 day supply of grain was considered an over supply even though it took a year to produce the crop. An 80-90 day supply of cars at Ford and GM was considered “normal” then. Figure that one for me.
In Columbia MO. as of two days ago.
Regular unleaded $3.29
E-85 $2.64 and available at many stations.
I know the E-85 is less efficient…but.
Your call!
DT
B20 is only .01 to .03 cents cheaper than #2 diesel at 3.849 to 4.00 here. At least some of the $ is staying at home! If Brazil can do it, surely we can with all our resources.
Maybe we should export our defense industry to China too. I am sure it would be cheaper – short term.
@tgrfan2
The facts are the USA produces more ethanol than Brazil, Brazil drills for offshore oil and Brazil is a third world country. Admitatelly with the present policies in the USA which do not allow for the development of domestic oil and subsidize ethanol the USA may be catching Brazil, although most would consider it a huge step backwards.
Subsidy, energy-expended-to-produce, and lower energy-density factors aside, there’s one other small math problem.
There’s not enough arable land in the US to grow enough corn to replace a significant percentage of our oil use, even if we converted 100% of our farmland to biofuel energy production.
The land is just not there. I guess we’ll have to start destroying freeways, airports, neighborhoods, SUV car lots, burger joints, and shopping centers…
I think I can probably grow a 5 X 5 patch of cornstalks next to my pool. Sure, it might only result in a few drops of ethanol, but every little bit will surely help, yes?
Krugman in the NYT is succinct on the topic of biofuels:
We also need a pushback against biofuels, which turn out to have been a terrible mistake.
But it’s not clear how much can be done. Cheap food, like cheap oil, may be a thing of the past.
97escort“Funny how when crude oil prices go from $30 to over $100/barrel no one resents it. Even when the biggest beneficiaries are Saudi Arabian sponsors of terrorist attacks on the United States.
What planet are you from? I’d say approximately 99% of the population resents the rising price of oil very much, which is why it’s in the news constantly. You live in a cave?
re: high fructose corn syrup, sugar, and Coca Cola — may as well point out that foodmakers switched to corn syrup and HFCS largely because it was cheaper than sugar … and it was cheaper than sugar only because the government decided to place massive protectionism around Louisiana’s sugar industry, making 100% of Americans pay many times the world price for sugar, strictly so as to protect the jobs of the .0001% of Americans who make sugar.
I think I’m sensing a pattern here … government subsidies and protectionism wreak havoc wherever they are applied …
In Columbia MO. as of two days ago.
Regular unleaded $3.29
E-85 $2.64 and available at many stations.
I know the E-85 is less efficient…but.
Your call!
DT
But… it’s not rocket science. On E85 cars get between 20 and 25% lower mileage (some claim more, some claim less, in reality your mileage may vary). A 20% reduction means the two prices are equivalent ($3.29 ~ $2.64/80% = $3.30). If you get 25% lower mileage, the gas is cheaper as the equivalent cost of the ethanol would be $3.52 (= $2.64/75%).
I would suggest checking out the April issue of Popular Mechanics for some good reading on ethanol production from sources other than corn.
PM also covers new oil exploration and recovery techniques that show great potential.