Exclusive outtakes from industry leaders
Verasun Chairman and CEO Don Endres says he doesn’t see soybeans taking the lead from corn in production of biofuel, despite the high prices of corn.
“From a farmer perspective … the economic benefit, in most cases … a corn acre is a better acre,” he said. “We looked at the biodiesel model for soybean based plants, their margins are very tight today.”
Demand for corn-based fuel, such as ethanol, might increase corn prices — but there would not be a significant hit to the consumer, says Iowa Renewable Fuels Association President Monte Shaw.
“A 12-ounce box of cornflakes costs $2.79, but there’s less than a penny’s worth of corn in it. So let’s say that corn goes from $2 to $4, well you’ve just changed the price of cornflakes from $2.79 to $2.80. Big deal.”
A Chicago Board of Trade official said on Tuesday he would expect that biodiesel could have its own futures contract in 3-5 years.
“But these things aren’t necessarily linear, either. government incentives could come into that market and it could expand much quicker than we think,” said Dave Lehman, managing director and chief economist, business development at CBOT.