Corn prices settled below the $4 mark Wednesday for the first time since last October. December corn, the front-month contract, fell 23 1/4 cents to $3.88 per bushel. In the past month, corn prices have fallen $1.74 (31%) due to the rapid decline in both crude oil prices and the stock market. Luckily for U.S. ethanol producers, ethanol prices haven't been hit as badly as ethanol's crush spread has improved:
As many of you already know, a major problem with ethanol is that it cannot be transported through existing pipelines because it is highly corrosive and water soluble. It seems, though, that several companies have recently been working to fix this problem. The article states that Houston-based Kinder Morgan Energy Partners (EPL) plans to run a test batch of ethanol this month through its 105-mile long underground gasoline pipeline. If successful, the pipeline could be...
In 2005, Congress approved the Energy Policy Act that mandates the use of ethanol in gasoline. The level was 4.7 billion gallons of ethanol for 2007. This will rise to 7.5 billion gallons in 2012. In fact, President Bush was pressing for an extension of this mandate to 35 billion gallons of ethanol by 2017.
At first people thought this was a great idea for something to replace MTBE, or even just substitute in some way for regular gasoline. However, several problems have arisen since then. First, this is an incredibly inefficient way to produce a gasoline substitute. It...
There are several confluent factors driving the demise of ethanol in the US, and there are ways you can profit from the high price of corn. For years now, several astute investors, economists and consumers alike have decried the US ethanol policy as ill-conceived and perhaps the biggest ruse pulled on the populace in decades.
Given the following recent events, the government is finally being forced to seriously reconsider its ethanol policy and investors are looking to exploit this movement:
As recently discussed at bullbeartrader.com, and followed-up yesterday with another article from Bloomberg, heavy rain is causing corn prices to reach record levels (see video here).
Prices have essentially risen for 6 straight days after Bloomberg reported a week ago how heavy rains would cut the corn crop estimates. Global inventories are forecast to fall to a 24-year low as prices head higher for the fourth straight year.
Add "bad weather" to the already lengthy list of problems corn-ethanol needs to overcome. Heavy rains, severe winds, and tornadoes throughout the Midwest has propelled corn into uncharted territory. July corn on the CBOT rose 28.6 cents Thursday to settle at an all time high of $6.43 1/4 a bushel.
Farmers are saying this is the worst weather they have seen since 1993, when U.S. crops suffered from weeks of rain that eventually led to the severe flooding of the Mississippi river. Agriculture Secretary Ed...
John McCain and twenty-three other Republican Senators sent a letter last Friday to the EPA asking the agency to reevaluate the current ethanol mandate as food prices continue to soar. The EPA does have the authority to waive the mandate or structure it differently "if the mandate results in adverse unintended effects."
According to
the March 31st prospective plantings report released by USDA,
farmers in the U.S. intend to plant 86 million acres of corn in 2008.
When compared to last year, this year?s acreage is estimated to decrease
by approximately 8%.
High input costs associated with corn and relative
soybean prices are encouraging farmers to reduce corn acreage and favor
soybeans. The present estimated 86 million acres are still considered
to be at high levels when compared to historical crop acreages. Also
at the same time, the demand for corn is increasing at a faster rate
than supply, creating...
The gasoline market and its players have formed the opinion that crude oil and ethanol can be price determinants, but not profit margins. The margins in refining gasoline is slowing down, 50-cents-per-gallon lower than its year-ago level, according to Lundberg data, and year-to-date is less than half its calendar-year 2007 size. The margin in retailing is losing out too. The retailers, fortunately, have year to date about the same good margin on regular that they had in 2005, 2006 and 2007 (about 11 cents).
In the short term, refiners and retailers need to gain margin unless one of...
Where the effects of bad policy are clearest, however, is in the rise of demon ethanol and other biofuels. The
subsidized conversion of crops into fuel was supposed to promote energy
independence and help limit global warming. But this promise was, as
Time magazine bluntly put it, a ?scam."
Golden Hope Mines Limited (TSX VENTURE: GNH | PowerRating)(PINK SHEETS: GOLHF | PowerRating) has issued 3,825,000 options at $.026 for a period of three years to Directors, Officers, Personnel and ...
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