Commodity Corner
Views on commodities and energy
from Environment Forum:
What a difference a year makes – Valero embraces corn ethanol
At last year's American Petroleum Institute conference, Bill Klesse, CEO of leading U.S. oil refiner Valero, slammed federal policymakers who push subsidies and mandates for production of ethanol, saying that using corn to make it would make food so expensive it would cause more misery than global warming.
"All of these programs are just a huge transfer of wealth from our industry (oil) to the Midwest farms," Klesse said in March 2008 speech.
A year later, Klesse has decided to join rather than fight. If the money is going to the Midwest corn farms, why not cash in, right? Valero two weeks ago was chosen by a bankruptcy court as the winning bidder for two more VeraSun ethanol-producing plants. The sale of seven former VeraSun plants closed on Wednesday and two more are expected to close soon.
A year and two weeks ago, Klesse said the federal government should stop favoring ethanol with subsidies. Now, Klesse and Valero are securing a supply of ethanol that it needs to mix with its gasoline.
"We expect increases in the Renewable Fuels Standard to continue," Klesse said two weeks ago when Valero's bid for VeraSun's plants was awarded.
The plants, in Iowa, Minnesota, South Dakota, Nebraska, and Indiana together will have a combined capacity that is 7.5 percent of the current operating U.S. ethanol capacity.
On Thursday, a Valero spokesman said the company needs to go full throttle on producing ethanol to mix with its gasoline. See the Reuters story.
Crop Tour Scene Setter
The annual Pro Farmer Midwest crop tour kicks off bright and early on Monday morning, giving participants a sneak peek at this year’s U.S. corn and soybean crops, valuable information that has the potential to send the futures market on another roller coaster ride this week. Severe flooding wreaked havoc on the newly seeded crops early in the summer, sending prices for both commodities to record levels. Good growing weather throughout July and August allowed the plants to recover nicely during the past six weeks and have left much of the crop looking very good from the roads. But farmers and agronomists insist that conditions are worse in the middle of the fields. The crop tour provides a perfect opportunity for those who want to see for themselves how the developing corn and soybean plants look. Scouts get down and dirty inspecting fields around the U.S. Midwest, counting soybean pods and ears of corn to estimate yields while taking note of any insect of disease issues. The tour means early mornings and long days for the scouts, something that farmers are accustomed but the schedule can be jarring for some of tour’s participants, including commodities traders, journalists and USDA officials. Bug spray, sun block and boots are a must for participants, quite a change from standard cubicle attire. Rain, a boon for the crops, can be the scourge of crop scouts as they scramble through the fields to get samples. Crop scouts also face challenges ranging from tricky navigation on country roads to the possibility of an angry farmer who does not want scouts trampling through his fields. The tour consists of an eastern leg and a western leg. The two groups will converge in southern Minnesota on Thursday afternoon. Final yield projections for both soybeans and corn will be presented on Friday.
No more ‘beans in the teens’? U.S. farmers plan more soy, less corn
American farmers are chilling on planting corn, or at least Monday’s USDA data points to a backlash against the overplanting of corn in 2007. So does this mean the ethanol promise is beginning to fade?
Soybean futures dropped their exchange-set maximum at the Chicago Board of Trade on Monday after the Department of Agriculture released its widely anticipated report on prospective plantings by U.S. farmers.
Corn and soybeans are planted in the same areas of the Midwest and Upper Midwest and farmers systematically rotate between the two crops. Corn is planted first but requires more fertilizer and energy intensive field work. Now soybeans appear to be the flavor of the year.
Farmers want to plant almost 75 million acres of soybeans, used in mainly animal feed, cooking oil and the renewable fuel biodiesel, up from 64 million last year. They are shifting land out of corn. After blanketing the Midwest with 94 million acres of corn in 2007 — the most since 1944 — 2008 will see a slightly-less-smothering 86 million acres. The plans should lift corn prices, a CME panel predicted.
Just facts over the last 50 years heart disease has risen in america red meat,dairy,and egg consumption per capita has declined. Vegetable oil consumption has increased.
