Print

[Thumpin455]

Even though it would still kick in if we werent making ethanol.  Farmers will plant corn regardless of ethanol provided they can afford it. The thing it is it another avenue to market their product. Its not like ethanol is the only reason they plant corn, its one of them, its only one use for corn. Ethanol is an easy target because people dont understand how its made or what happens to what it is made from. Too technical for the average joe.

[mtbottle]

Oh, I understand you fully.  Another thing is that when prices drop that low, support payments will kick in.  And the anti-ethanol crowd will jump all over that.

[SacramentoE-85]

Hey mtbottle; didn't mean to address it towards you; just the "experts."  $2.50 corn might be desirable, if it only costs $2.00 to produce.  Right now it looks likely to cost most of $3.50 to produce.  If so, the market would be indicating not to produce corn by diving to $2.50.  If the price falls partway through the growing season, farmers would then be forced to hold off selling the crop until it came back up to $3.50 to entice selling.

[mtbottle]

I couldn't agree with you more on the macroeconomics.   I was only quoting what some so-called expert said.   I personally would love to have cheap fuel prices, but I also understand that $2.50 per bushel corn is not desireable.

In a few months we will know the real answer.

[SacramentoE-85]

For corn prices to go down to $2.50 per bushel, 1) the input prices will need to fall by 1/3 and 2) there will need to be a much larger carryover supply going into the 2010 corn season.  The first may happen over time, but the second part is highly questionable.

I think that a lot of people that write articles, including some scientists, just don't understand how macroeconomics works.  Fertilizer, chemical, and seed prices are still high (not to metion fuel is higher than several years ago).  "The market" knows that farmers won't produce corn for less than it is worth (well, at least not less than what the government will guarantee with supports).  Therefore, "the market" (corn processors and livestock producers, as well as ethanol biorefineries) prices corn high enough to ensure that farmers will produce enough of it to satisfy demand.

That's just the way it is.  There are still as many or more people in the world this year as last.

Also, if we took 10+ billion gallons of ethanol out of the U.S. fuel market, that would drive up fuel prices.  Fuel prices help determine the fertilizer, seed, and chemical prices.  Those prices help determine the market price for corn.  In the end, this would increase the price of corn.  Besides which, the feed part of corn is actually available as DDGS, corn gluten, etc.  So it's not like we really increase the livestock feed supply much if any by removing ethanol from the equation.  If we don't increase the feed supply, we don't decrease corn prices.

Sheesh, macroeconomics really is a simpler subject than I thought back in college!   

[mtbottle]

The latest report on corn prices is out.  Current prices are about $1.00 lower than they were last year at the same time.  And they are projected to go as low as $2.50 per bushel.

[mtbottle]

Cut grains prices 20%!  Wow!  Do they want farmers to give it away?

The average price that was paid to farmers in 2008 was $3.85 per bushel.  The latest projections are claiming as low as $2.50 per bushel this year. 

I guess that is why farmers are projected to plant less corn.

[1outlaw]

I do completely agree with you about local production and small scale but even commercial sized plants can cut out most of the double freighting by direct marketing E85 thru blender pumps in a 80 mile radius- alcohol is trucked once and the customer choses the mix. While this does not allow for the efficiencies of hydrous ethanol (Fed/State regs) or at this point E98 it is a far more efficient distribution than trucking/railing to an oil rack and trucks hauling final blends back out again (and oil companies having the pleasure of making it less competitive by tacking on 20-50 cents).

If this is going to happen though banks need to free up credit soon.

With home production at least you are in full control no matter what happens and that gives real peace of mind.

[Thumpin455]

We need the fewest fingers in the pie, the most efficient distribution, increasingly efficient production of ethanol, development of many feedstocks (grain, sugar, cellulose, waste whey, municiple solid waste, algae, etc), a lot of time for the markets to adjust and settle (markets are just a pendulum), fair press (not asking for unrealistic but accurate), and some public assistance to level the playing field in E85 while the automakers come around with better and more flex vehicles (and legislature to remove some of the oil subsidies). For ethanol to survive well it also needs other alt fuels from non-fossil sources such as wind/solar/geothermal/ and nuclear derived electric to ease some of the increasing pressure on ethanol to "do it all" in transportation fuels. These will need to be regional solutions for the long run. 

You are so close to the solution that if it was a diamond back rattle snake you would be dead. One thing that drives the price of ethanol up is centralized distribution, having it produced all over, then trucked to a distribution point, then trucked out again. Too many fingers in the pie is exactly the right metaphor.

If we change our thinking to small scale production utilizing untapped natural resources all around us, and use feedstocks that have a very high yield per acre, that dont require prime crop land, then we can make more than enough for everyone. Make it a regional economy rather than spreading it out over hundreds of miles. Only having to go 20 miles at most to the source of fuel would make a huge impact on cost. Add in not having to buy fuel for the process would impact the cost even more. Small operations make using more alternatives easier.

[Dan M]

Corey if you want to make a table/or spreadsheet take it down to even 50% and we will make it a sticky thread

I suppose I could put something together...what did you have in mind?

Thats ok..I just stickyed this thread .. http://e85vehicles.com/e85/index.php/board,6.0.html

[Corey872]

Corey if you want to make a table/or spreadsheet take it down to even 50% and we will make it a sticky thread

I suppose I could put something together...what did you have in mind?

[Dan M]

.. a lot of time for the markets to adjust and settle (markets are just a pendulum),

I think thats where we are now ..I believe we swung to far to the right too fast.. lets hope a correction that dosent cause more damage

[1outlaw]

Dan- I do not feel there are too many secrets;

We need the fewest fingers in the pie, the most efficient distribution, increasingly efficient production of ethanol, development of many feedstocks (grain, sugar, cellulose, waste whey, municiple solid waste, algae, etc), a lot of time for the markets to adjust and settle (markets are just a pendulum), fair press (not asking for unrealistic but accurate), and some public assistance to level the playing field in E85 while the automakers come around with better and more flex vehicles (and legislature to remove some of the oil subsidies). For ethanol to survive well it also needs other alt fuels from non-fossil sources such as wind/solar/geothermal/ and nuclear derived electric to ease some of the increasing pressure on ethanol to "do it all" in transportation fuels. These will need to be regional solutions for the long run.

The ethanol plants are built and must be run full out if you do not want the financial markets to turn their back on all alt fuel investments. I would prefer E85 to receive more tax credit than E10. The state of Wisconsin charges the same road tax for E85 that it does for NL and Diesel- how is it fair that a gallon of diesel at 138,000 btu pays the same tax as NL at 114,000 btu or E85 at about 82,000 btu??? E85 users pay more road tax per mile they drive but the states see it as a windfall to cover increasing buget shortages. If the federal credit continues to shrink then this will need to be fixed.

[Dan M]

So $6 dollar corn is just a minor part of the increase in food. Transport (fuel) cost , Labor , inflation and retail markups are the main "culprits"  So the Food vs Fuel debate is closed

That's all fine and dandy but what isn't closed is what $6 corn does to the cost of ethanol. Most corn plants are now only marginally profitable, some will go bankrupt and others have stopped plant projects dead in their tracks .


Our concern should be Fuel Vs Fuel debate ..  Shouldn't we have cheap ethanol so it can compete against expensive gasoline

We do not get cheap E85 by mandating ethanol as an additive .. slower but certain stable growth of E85 keeps the investors in and the price run up of the speculators out

This seems to be one the largest challenges ..ensuring everyone (farmer, ethanol company, distributers, blenders) makes a nice profit while at the same time giving the consumer the best alternative fuel product ethanol can put on the Market (E85) at a price that drives OPEC up their greasy wall

[1outlaw]

Corey- The author's name ends in Von Braun but he sure aint Werner. Nice!