Views on commodities and energy
from Environment Forum:
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.
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.
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.