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Power Hour: Short Corn Crop Puts the Squeeze on Ethanol

September 5, 2012
By: Sara Schafer, Farm Journal Media Business and Crops Editor
POET ethanol plant
  

Groups are calling for an end of the ethanol mandate. Watch this U.S. Farm Report roundtable to see what that means for grain markets.

 

Should the U.S. Environmental Protection Agency (EPA) waive its Renewable Fuels Standards (RFS) mandates due to the drought-impacted corn crop? That’s what the audience wanted to know at a recent U.S. Farm Report marketing roundtable.

Alan Brugler, president of Brugler Marketing & Management, says if ethanol demand is reduced, the price will likely fall. "If we said we’d no longer require the use of ethanol, that’s only going to knock the ethanol price down, which will make everyone want to use more."

Power Hour webArlan Suderman, Farm Futures grain market analyst, says our agricultural infrastructure is dependent on ethanol and market indicators will drive the mandate decision. "Economics instead of policy will affect the market more."

Sue Martin, Ag and Investment Services, says she’s worried removing the ethanol mandate will also reduce the amount of DDGs available to livestock producers. "We certainly aren’t going to have the amount of corn we’re accustomed to," she says. In the current situation, Martin believes exporters could be fighting against ethanol producers.

Watch the U.S. Farm Report roundtable, from the 2012 Farm Progress Show:

Part 1

Part 2

 

Read more about the current ethanol controversy:

Ethanol Mandates Need to Be Waived
For dairy and livestock producers, it's a no-brainer. EPA administrators, however, will be under intense pressure from waiver opponents. But there is middle ground. 

Waiving Ethanol Mandates Won’t Cut Corn Prices—Much
And when it comes to ethanol and its marriage to the Renewable Fuels Standards (RFS), that conventional wisdom applies in spades.

Lower Corn Production Fueling Calls for Ethanol Waiver
With USDA’s forecast that corn production this year will drop 13% to a six-year low as a result of the historic drought nationwide, the calls to divert more corn for food versus fuel are likely to grow more urgent.

 

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