another view on Corn Ethanol

[mjd1001]

I'll post the link to the website where you can get the entire article below. It is an economic article at heart (and rather lengthy), but there are some interesting points made about ethanol in it by author John Mauldin.

I am not posting this to bash ethanol, nor do I think it is fear mongering. Just for those people on here intested in corn based ethanol and it's pluses and minuses, it is a good read:

to access full article, here: http://www.frontlinethoughts.com/gateway.asp

North America has experienced great weather for the last 18 consecutive years, which, combined with other improvements in agriculture, has resulted in abundant crops. According to Don, you have to go back 800 years to find a period of such favorable weather for so long a time.

Yet food stocks in corn, wheat, rice, etc. are dangerously low. We are just one bad weather season from a potential worldwide food disaster. And Dennis Gartman has been pointing out almost daily how far behind US farmers are in getting their corn crops planted, due to bad weather:

“… the corn crop really is behind schedule. Corn is not like wheat. Wheat can survive drought; it can survive cold; wheat, as we were taught by our mentor, Mr. Melvin Ford, many years ago, is a weed. It is an amazing, resilient plant. But corn is temperamental; it needs rain when it needs rain; it needs dry conditions when it needs dry conditions. It needs to not be hit by early season frost, or it will suffer, and it needs a rather archly set number of days to grow. Each day lost at the front end of the planting/growing season puts pressure upon the corn plant to finish its job before the autumn frosts, and puts increased soybean acreage and decreased corn acreage before us.

“The maps of the Midwest this morning have it raining once again, with more rain likely over the weekend. There will be some field work done in some areas, of course, but the several straight days of corn planting that everyone had hoped for simply are not going to take place. The ethanol mandates may be in jeopardy in the long run, but in the short run, this year's corn crop is swiftly becoming problematic ... and short.”

I had a note from a reader relating the experience of a member of his family. The gentleman runs a rather large feed lot in West Texas. He is running half the cattle he normally does, as he is losing money on every head he sells. Ranchers are reducing their herds, as they cannot afford to feed them due to high grain prices.

The same thing is happening with chickens. Producers are losing money on every chicken they sell, and they have to reduce inventories; thus meat of all types has not risen as much as the cost of producing it.

This means sometime this fall supplies of meat of all types are going to be reduced, but demand will not. And that means that meat prices have the potential to rise substantially during an election season. Maybe someone will point out that using corn to produce ethanol has the unwanted and unintended consequence of driving up food prices all over the world. It is not the sole source, but it is significant.

And when we finally experience a year of bad weather (whether too much rain or too little, too cold or too hot, it will be blamed on global warming), food supplies and prices are going to skyrocket. And a developing world will not look kindly on the US and Europe's use of food for fuel when so many are starving. Don says that this is not a matter of if, but when.

[HoosierRon]

Feed lot cattle are disgusting. If the farmer would allow his cattle to graze like they should, he would not be complaining about corn prices. If we stopped buying feed lot cattle, it would reduce the demand for corn far more than if we stopped corn ethanol production. Go here to see how it should be done.

[pinyon]

Originally Posted by HoosierRon

Feed lot cattle are disgusting. If the farmer would allow his cattle to graze like they should, he would not be complaining about corn prices. If we stopped buying feed lot cattle, it would reduce the demand for corn far more than if we stopped corn ethanol production. Go here to see how it should be done.

You mean the way it was when I was young growing up in rural Iowa. Who'd have thought it was possible?

I'm with you HoosierRon. Feedlots and industrial agriculture do suck. It was nice when we actually knew where our food came from.