[Bioenergy] RE: [Gasification] USDA Crop Forecast, Corn & Ethanol...

Fri May 19 10:37:44 CDT 2006

Dear Mark
...del...
>
> I think it's going to be very hard for the corn ethanol industry to go 
> bankrupt unless something else causes the price of oil to decline long 
> term. Anyone have some candidate causative factors?

One possible scenario is as follows...If the US Economy collapses, perish 
the thought, worldwide demand for oil will drop markedly, and with falling 
demand, the real price per barrel will also fall. However, with inflation, 
and hyperinflation, the fall in the real price of oil will be superficially 
hidden. Simmonds made a sucker bet with teh World when he bet that oil would 
be more than $200 per barrel within 5 years... if there is no World 
Collapse, growth in demand will drive prices to these levels, but if they 
get to about $100 to $125 per barrel, they will cause a collapse, and the US 
will accelerate its present inflationary program in order to stay alive, and 
oil will be above $200 because of hyperinflation. Given that ethanol from 
corn seems very dependant on Government support and fossil fuel inputs, it 
seems vulnerable to collapse, if the US Gov't can't afford continued 
subsidies, or if the ethanol from corn people can't afford the cost of the 
fossil fuel component.
>
...del...
>   And oil is going to set a minimum price floor for ANYTHING that can be 
> wet milled or dry milled and then distilled into ethanol.  Just one 
> example.  If you are a potato farmer, why would you ever take less than 
> you can get for turning your spuds into ethanol?

"As soon as you play their game, you lose." Smart Farmers are probably 
learning from corn ethanol, and may choose to stick with more reliable 
markets for their produce.

Best wishes,

Kevin
>
> Regards,
>
> Mark
>
>
>
> ----- Original Message ----- 
> From: "Denny Haldeman" <dennyh at bellsouth.net>
> To: "Roger Samson" <rsamson at reap-canada.com>; "'Mark & Elena Gallmeier'" 
> <mgallmeir at comcast.net>; <gasification at listserv.repp.org>
> Cc: <bioenergy at listserv.repp.org>
> Sent: Thursday, May 18, 2006 6:34 PM
> Subject: Re: [Bioenergy] RE: [Gasification] USDA Crop Forecast, Corn & 
> Ethanol...
>
>
>> How many ethanol plants are running solely on their product, including 
>> planting, harvest, processing and distribution?  That will tell the 
>> truth. Waiting.  Denny
>>>
>>> From: "Roger Samson" <rsamson at reap-canada.com>
>>> Date: 2006/05/18 Thu PM 02:44:14 EDT
>>> To: "'Mark & Elena Gallmeier'" <mgallmeir at comcast.net>,
>>> <gasification at listserv.repp.org>
>>> CC: bioenergy at listserv.repp.org
>>> Subject: [Bioenergy]
>>> RE: [Gasification] USDA Crop Forecast, Corn & Ethanol...
>>>
>>> This story is better for a bioenergy posting. The Bush corn ethanol 
>>> policy
>>> is in fact really great news for all US farmers. It's inevitable with 
>>> the
>>> across the board rise in energy and mineral commodity prices that ag
>>> commodity prices were eventually going to increase somewhat, but now 
>>> they
>>> could soar as demand for farm products for energy increases with the 
>>> massive
>>> construction of corn ethanol plants. However who will bail out the 
>>> ethanol
>>> plants as they go bankrupt because of high corn prices and high energy
>>> prices to operate them.
>>>
>>> The real story is the need to redesign the bioenergy industry so that
>>> taxpayers, farmers and the environment win. Only the farmers that didn't
>>> invest in the corn ethanol plants and the agribusiness input merchants 
>>> are
>>> the beneficiaries of the current corn ethanol policy. Once corn ethanol
>>> crashes we will begin to appreciate Pimentel's concerns about the energy
>>> balance of corn. He forewarned America about the coming corn ethanol
>>> boondoggle.
>>>
>>> Roger Samson
>>>
>>>
>>>
>>>
>>> -----Original Message-----
>>> From: gasification-bounces at listserv.repp.org
>>> [mailto:gasification-bounces at listserv.repp.org] On Behalf Of Mark & 
>>> Elena
>>> Gallmeier
>>> Sent: Thursday, May 18, 2006 1:06 PM
>>> To: gasification at listserv.repp.org
>>> Subject: [Gasification] USDA Crop Forecast, Corn & Ethanol...
>>>
>>> To All,
>>>
>>> ...is out.  It's the hook for this story:
>>> http://news.yahoo.com/s/ap/20060512/ap_on_bi_ge/crop_report  USDA is
>>> forecasting a 15% - 30% increase this year in U.S. corn prices.  Ethanol
>>> demand was cited as the primary market force behind this expected move.
>>> USDA is forecasting a 34% one year increase in the amount of corn 
>>> converted
>>> to ethanol.
>>>
>>> And the wheat harvest is forecast to be the lowest since 2002, down 12
>>> percent from last year:
>>> "Meanwhile, the nation's soon-to-be-harvested winter wheat crop is on 
>>> track
>>> to be the smallest since 2002, analysts said. Farmers are expected to
>>> produce 1.32 billion bushels of winter wheat, down 12 percent from last
>>> year.  Drought in Texas, Oklahoma and throughout the central and 
>>> southern
>>> Great Plains has dramatically reduced yields..."
>>>
>>> Left unstated is the wheat acreage this year and how it compares to 
>>> previous
>>>
>>> years.   A reasonable expectation is for corn and soybeans to now 
>>> displace
>>> wheat on all acreage where realistic choices exist of which crops to 
>>> plant.
>>>
>>> Decline of Corn Reserves.
>>>
>>> "Demand has risen so sharply, the amount of corn in storage is expected 
>>> to
>>> drop to half of last year's levels, the department said.  "That's really
>>> good news," said McCauley, who farms nearly 4,000 acres with his son. 
>>> "The
>>> more corn you have on hand, the less prices will go up.""
>>>
>>> Great news alright.  Three millenia of ancient wisdom - carrying grain
>>> reserves to guard against events like drought reducing subsequent 
>>> harvests -
>>>
>>> is now being replaced by Just In Time Agro-Manufacturing.  Even better 
>>> are
>>> the New Farm Economics.  The old discredited system centered for 
>>> thousands
>>> of years on increasing yields and productivity to increase farm incomes.
>>> 'Value added.'   The new system is much simpler.  Drastically increase
>>> demand to raise prices strongly to increase farm incomes.
>>>
>>> Well, too many Americans suffer from obesity anyway, so some lean years 
>>> will
>>>
>>> help shape them up.  Time's running out to survey and stake claims to 
>>> sites
>>> and prepare to farm those jumbo-sized family gardens in the USA, folks. 
>>> A
>>> lot of potential locations will need soil amendment which takes time.
>>> Barrel farming potatos will cause all scrap auto and truck tires to 
>>> vanish
>>> in flash.
>>>
>>> Mark
>>>
>>>
>>>
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>>>
>>>
>>>
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>>>
>>
>>
>>
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>
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