Corn Commentary

UN Unaware Corn Prices are Falling

On Tuesday, the United Nations Food and Agriculture Organization called for a review of “current policies supporting, subsidizing and mandating biofuel production and use” because demand for biofuels, such as ethanol or biodiesel, was leading to “continued upward pressure” on the price of agricultural commodities.

FAOHowever, commodity prices are falling – and rapidly. Right along with the stock market, corn futures dropped Monday more than 6% to the lowest level in more than 10 months, and the decline continued on Tuesday with corn for December delivery closing at $4.17.

As the old saying goes – the best cure for high prices is high prices – meaning that, basically, what goes up must come down. Corn is getting back down to year ago levels now after hitting around $8 a bushel earlier this year.

However, the new FAO report “The State of Food and Agriculture 2008″ was probably written back when commodity prices were higher, I guess on the assumption that they would just continue to rise.

The FAO report says “The emergence of biofuels as a new and significant source of demand for some agricultural commodities … contributes to higher prices for agricultural commodities in general, and for the resources used to produce them.”

Oddly enough, the report says nothing about the impact of higher biofuel production on oil prices – which are also much lower now then they were earlier this year.

Illinois Corn Growers E85 Challenge

GatewayThe Illinois Corn Growers Association is teaming up with Gateway International Raceway and Mustang 5.0 Magazine to showcase E85 as a high performance racing fuel this month in Madison, Illinois.

ICGAThe E85 Challenge will showcase street legal, production line built and custom made performance cars running on America’s fuel. “The Challenge will show how flexible E85 is in today’s cars and shine a spotlight on how ethanol, known primarily for its environmental and economic contributions, is also a high octane product,” said ICGA President Art Bunting.

The E85 Challenge is scheduled for 2-4 pm on October 15 and admission is free. After 5 p.m. gate admission is $10. Details can be found here on the Gateway International Raceway website.

Candidates on Issues

The National Corn Growers Association has released the answers it received from the presidential candidates on issues important to agriculture. It is important to note that NCGA is a nonpartisan, grassroots organization that does not endorse candidates for any political office but only provides information to grower-members so they can make informed decisions.

McCain ObamaThat being said, growers should read all of the candidates responses to the issues and make up their minds for themselves. They will find some very stark differences between the two candidates on issues such as the farm bill and ethanol, for example.

On the farm bill, Senator Obama says he supports “a robust safety net that targets assistance appropriately and provides farmers with risk mitigation tools that protect them from weather and market conditions that are beyond their control. This includes traditional farm programs, crop insurance, and disaster assistance.”

Senator McCain supports a risk management program for agriculture that reflects the realities of the global marketplace for food, fuel and fiber in the 21st century. However, he says he “will oppose subsidies, which distort markets, artificially raise prices for consumers, and interfere with America’s ability to negotiate with our international trading partners to the detriment of the entire agriculture community.”

Similarly, McCain’s position on ethanol states, “I do not support the current system of tariffs, subsidies and mandates. Rather, as a country, we must focus on stimulating end-user demand for renewable energy and creating a consistent regulatory and tax framework that encourages investment in research, domestic refining capacity, and distribution systems to promote energy independence.”

Obama on ethanol: “I am a proud supporter of the Renewable Fuels Standard and tax incentives for biofuels. I’ll invest $150 billion over the next ten years in our green energy sector, enhancing farmer profitability, injecting capital into rural economies, and creating up to 5 million new jobs in the process – jobs that pay well and can’t be outsourced.”

These positions are likely going to make it a tough choice for Republican farmers this November.

MO Corn Honored for Service

In recognition of the hard work Missouri corn growers put forth to grow our state’s agricultural industry, Missouri’s Lieutenant Governor Peter Kinder presented the Missouri Corn Growers Association (MCGA) with a declaration last week at the state capitol. The “Declaration in Support of Agriculture Service” was given to highlight MCGA’s contribution to the success of Missouri’s agriculture industry and encourage a future relationship between the Lt. Governor’s office and Missouri Corn in order to meet the needs of the state’s most vital industry.

Pictured with Lt. Governor Kinder are Jayne Glosemeyer, Missouri Corn Merchandising Council chairwoman; Mike Geske, Missouri Corn Growers Association president; and Ashley McCarty, MCGA director of public policy.

Milking Cows and Growing Bottles

Biodegradeable bottles made from corn are greening up the U.S. House of Representatives.

As part of the Green Capital Initiative, “Green Bottle Spring Water” from a company called Naturally Iowa will now be the only bottled water available in the US House Cafeteria. The bottles are made out of polylactic acid (PLA), a biodegradeable plastic made from corn. The bottles can be composted, incinerated, or ground up and used again. The Cafeteria has access to a well-developed industrial compost system developed by the United States Department of Agriculture. The composting material is sent daily to the facility in nearby Maryland to go from trash to topsoil in less than ninety days.

The slogan for Naturally Iowa is “We Milk the Cows and Grow the Bottles.” Co-founders William Horner and Steve Williams both grew up on farms in Southwest Iowa, and later returned to farming after completing their education. In 2002, the two partnered to provide an opportunity for family operated dairy farms to make a comeback by adding value to their product and became the world’s first dairy to use PLA bottling.

The company produces milk, ice cream and drinkable yogurt in PLA packaging and moved into the bottled water business by partnering with a natural spring water company out of Virginia.

A Look at China’s Corn Crop

Representatives of the U.S. Grains Council recently returned from their China Corn Tour, which is conducted every year to try and get a handle on production, yields and demand, since there is no source of reliable corn crop estimates from the Chinese government. The tour consisted of four groups of agriculturists evaluating nearly 300 cornfields.

Charles Ring of the Texas Corn Producers Board was with the group that toured corn fields in the Northeastern provinces of Heilonjiang and Jilin. He is also the team leader of the Council’s Asia Advisory Team and is pictured here with a Chinese farming family. “The farmers in China are very efficient with what they have,” observed Ring. “They don’t waste anything and family is the central point of their work.”

What the groups were able to determine on their tours was that higher corn yields are expected in China for 2008 compared to 2007 resulting in a crop of 153.54 million metric tons – or about 6 billion bushels. According to Cary Sifferath, U.S. Grains Council senior director in China, the national average yield for all provinces is 5.28 tons per hectare (84 bushels per acre) with Jilin province showing the highest yield the tour saw in terms of production at 111 bushels per acre.

Despite the improved yield numbers in 2008, there seems to be little sign that China will begin exporting corn anytime soon as the government has been trying to control food inflation. “The government has virtually shut down exports of corn, wheat and rice. Other than a few sales trying to go through, there are no real exports going on at all,” Sifferath said. He also said feed demand in China is increasing with more corn going into the country’s swine industry.

Tons of Livestock Feed

Just how much animal feed does the American ethanol industry produce each year?

According to a new analysis by the Renewable Fuels Association, America’s ethanol producers delivered 23 million metric tons of livestock and poultry feed to the world last year, or nearly three times the amount of wheat, sorghum, barley and oats fed to U.S. livestock in the 2007/08 marketing year.

Put another way, the amount of feed produced by the ethanol industry in 2007/08 is roughly equivalent to the combined total amount of feed consumed by cattle on feed last year in Texas, Kansas, Nebraska, and Colorado-the nation’s four largest feedlot states.

Read the entire report here.

Producing Food and Fuel to Fight Poverty

This week’s summit on the Millennium Development Goals of the United Nations seemed to focus precious little time on how agriculture can help end global poverty and hunger. In fact, it was sad to see that the whole summit seemed to focus more on problems than solutions.

However, a pre-summit private industry forum did offer some constructive suggestions, and one of them is biofuels production. The CEO of South Dakota-based POET, the world’s largest ethanol producer, was one of two presenters at a roundtable on energy and biofuels at the UN on Wednesday. Jeff Broin made a compelling argument for ethanol being “one of the greatest opportunities our world has seen in decades” mainly because of the great productivity possible in agriculture. Here’s just a portion of his comments – you can read the rest on the POET blog, on Rhapsody in Green.

With a billion acres of idled cropland across the globe — and the price of agricultural commodities above the cost of production for the first time in decades –there is an unbelievable opportunity for underdeveloped countries to simultaneously lift people out of poverty and solve their crippling addiction to energy imports.

How? Given all the advancement in agriculture, including new seeds, more durable crops, and smarter farming techniques, people today in places as far apart as Sioux Falls and South Africa can grow more sustainable crops than ever before. For example, in the 1940s, the average American farmer produced about 40 bushels of corn per acre; today it’s 140. The result is an agriculture industry that can meet the growing demand for food and biofuels — and help nations once left out of the agriculture industry take care of their food needs, raise people out of poverty, and develop a profitable, self-sustaining farming industry.

And the good news is that this development doesn’t have to come at the expense of the environment. The billion acres of idled crop land guarantees that new farm land need not come from rainforests or other sensitive areas. And thanks to the work of scientists, farming today relies much less on pesticides and much more on new seeds and smarter agricultural techniques.

Is anybody listening?

DOE Still Bullish on Ethanol

The U.S. Department of Energy’s renewable energy chief took on corn ethanol critics last week, arguing that without existing ethanol production, “the price of gasoline would have been a lot higher.”

Story here.

Texas Big on Ethanol

As a home to many livestock and oil interests and a governor who has little use for the renewable fuels standard, Texas is also a corn state and home to a burgeoning ethanol industry. So it was only fitting and proper (and good fun, no doubt!) for the Renewable Fuels Association to spotlight Hereford, Tex., in its new ad campaign promoting ethanol.

Interestingly, it was research out of Texas — A&M University’s own Agricultural and Food Policy Center — that has been used by RFA and other ethanol supporters to defend the RFS!

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