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http://news.yahoo.com/s/ap/20080403/ap_on_bi_ge/corn_at6;_ylt=AmiAdxzQ0ePrSIK_JQGazLms0NUE





"NEW YORK - Corn prices jumped to a record $6 a bushel Thursday, driven up by an expected supply shortfall that will only add to Americans' growing grocery bill and further squeeze struggling ethanol producers.

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Corn prices have shot up nearly 30 percent this year amid dwindling stockpiles and surging demand for the grain used to feed livestock and make alternative fuels including ethanol. Prices are poised to go even higher after the U.S. government this week predicted that American farmers — the world's biggest corn producers — will plant sharply less of the crop in 2008 compared to last year.

"It's a demand-driven market and we may not be planting enough acres to supply demand, so that adds to the bullishness of corn," said Elaine Kub, a grains analyst with DTN in Omaha, Neb.

Corn for the most actively traded May contract rose 4.25 cents to settle at $6 a bushel on the Chicago Board of Trade, after earlier rising to $6.025 a bushel — a new all-time high.

Worldwide demand for corn to feed livestock and to make biofuel is putting enormous pressure on global supply. And with the U.S. expected to plant less corn, the supply shortage will only worsen. The U.S. Department of Agriculture projected that farmers will plant 86 million acres of corn in 2008, an 8 percent drop from last year.

Moreover, cold, wet weather in parts of the U.S. corn belt may force farmers to delay spring planting, potentially sending prices even higher.

While corn growers are reaping record profits, U.S. consumers can expect even higher grocery bills — especially for meat and pork — as livestock producers are forced to pass on higher animal feed costs and thin their herd size.

"Higher corn prices is going to affect meat prices. If you're feeding with $6 corn, you'll definitely have some (cost) pressure," Kub said.

In addition, corn and corn syrup are used in an array of products, meaning the price of everything from candy to soft drinks will eventually go up, analysts say. It's the latest dose of bad news for U.S. consumers, who are already struggling with higher food costs from record increases in the price of wheat, soybeans and other agriculture products.

Another loser in higher corn costs is ethanol producers, who are struggling to squeeze out gains as corn's record-setting run outpaces the price of ethanol, currently at around $2.50 a gallon.

"For years, corn was cheap and fermentation processes for ethanol production came to completely dominate the biofuel industry in North America," Michael Jackson, president and chairman of Vancouver-based ethanol maker Syntec Biofuel, said this week. "Now, with corn prices well over $5 a bushel, corn ethanol economics have gone out the window."

The nation's 147 ethanol plants now have the capacity to produce 8.5 billion gallons of fuel a year, according to the Renewable Fuels Association. Corn is the basic feedstock for most of the plants and about 20 percent of last year's 13 billion bushel corn crop was consumed by ethanol production. That percentage is expected to increase to 30 percent for the next crop year, which ends Aug. 31, 2009, according to Terry Francl, a senior economist for the American Farm Bureau Federation.

There are still plans to build or expand another 61 plants, which will add about 5.1 billion gallons of capacity. However, as corn prices have climbed over the past year or so, construction of several plants has been halted or delayed, shaving about 500 million gallons worth of capacity off the original figure, according to Broadpoint Capital analyst Ron Oster.

At least one facility, the Alchem plant in Grafton, N.D., shut down late last year because of high prices.

A new plant hasn't broken ground over the past couple of quarters, Oster said, and while producers can have positive gross margins with ethanol at $2.50 a gallon and corn at $6 a bushel, that doesn't mean companies are profitable.

"Bottom line earnings are near break-even or modestly below break-even," he said.

Looking ahead, only the strongest ethanol producers will survive in an era of ever-rising corn prices, said Soleil Securities analyst Ian Horowitz.

"There are going to be some particular companies that definitely have the balance sheet and efficiencies that will be able to eke out a positive return in this kind of environment," Horowitz said. "And then there will be others that will suffer at the hands of $6 corn."


:barf2:
 

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Right...so now our $5 pizza becomes $8 and our $1.29 loaf of bread becomes $3. So what is the whole point of ethanol? To burn better and less pollution? Arguably, it takes just as much fossil fuel to produce ethanol as it does gas. So now we pay just as much in high fuel costs, pay more for food, but we burn cleaner emissions?
 

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Right...so now our $5 pizza becomes $8 and our $1.29 loaf of bread becomes $3. So what is the whole point of ethanol? To burn better and less pollution? Arguably, it takes just as much fossil fuel to produce ethanol as it does gas. So now we pay just as much in high fuel costs, pay more for food, but we burn cleaner emissions?
Ethanol was supposed to be our savior to free country of high import oil prices and dependence, reduce pump prices, first...less pollution second.

Unrelated or related, depending on how you view the issue, the prices of wheat have also trippled...affecting inflation of consumer staples/food.
 

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I always saw it as more of a stepping stone. Not necessarily something to free us from foreign oil, but reduce our dependence while we developed more efficient power sources.

Obviously there wasn't a lot of thought given to the effect on food prices/supply, and I can't help but wonder how many of the farmers who are sitting back collecting subsidies actually have the land available to assist in increasing our supply of corn.
 

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I'm not the least bit supprised that corn prices are going up (higher demand, higher price) but why in the world would farmers plant less corn? That makes no sense what so ever. It costs the same to plant and raise and harvest corn as it did before, but you get to sell it for more money, making the whole process more profitable. Wouldnt farmers be jumping on the deal? I've read elsewere that they are.
 

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I'm not the least bit supprised that corn prices are going up (higher demand, higher price) but why in the world would farmers plant less corn? That makes no sense what so ever. It costs the same to plant and raise and harvest corn as it did before, but you get to sell it for more money, making the whole process more profitable. Wouldnt farmers be jumping on the deal? I've read elsewere that they are.
Usually in order to get the most out of your soil, you have to alternate what you plant every year. It's called "crop rotation." Around my area, most farmers alternate corn and soybeans. I'd say a lot of farmers used new fields to plant corn anticipating the heavy demand, but after a couple of years the nutrients needed for a strong crop have been depleted, and now they have to plant different crops to revive the soil.
 

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Discussion Starter #8
Usually in order to get the most out of your soil, you have to alternate what you plant every year. It's called "crop rotation." Around my area, most farmers alternate corn and soybeans. I'd say a lot of farmers used new fields to plant corn anticipating the heavy demand, but after a couple of years the nutrients needed for a strong crop have been depleted, and now they have to plant different crops to revive the soil.

That, and they can boost trading prices by reducing crops, just like big oil does.
There ARE corn and wheat futures trading.
 

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Discussion Starter #9 (Edited)
:hello:, I sure hope this doesn't come as a huge shock.
I dunno.
I thought me and Vash discussed it in an earlier thread.
Some of washingtons peeps said it was possible..
Just not enough
 

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Honestly,
I wouldnt be suprised if trading in lithium ore puts hybrid cars and e-cars in a bind soon too, making them unfeasible.
 

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Duner, you are turning dangerously anti market. Cartels like you are suggesting are notoriously hard to enforce, and hardly ever work
 

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the whole corn gas ethanol bs and hybrids are great if you want to show off to your friends how much of a bleeding heart neo-facist liberal you are but honestly the corn problems are described above and beyond that cause more pollution to make the ethanol then they save by burning "cleaner".. and the hybrids and electrics aren't much better.. why in the world they don't just make cars run on natural gas that we have an 8 billion year supply of escapes me.. the whole earth day deal was made up by corporations who want you to cut back on fueling up, grilling, driving your car, etc. so when the government measures the pollution level they aren't forced to cut back or clean up the environment.. and its all under the guise of "do something good for your environment".. let me tell you if everyone reading this never drove another mile in their life or mowed the lawn or did anything to pollute the environment it wouldn't make 1 iota of a difference..
 

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Processing the corn kernal itself is going to be a thing of the past in a short while anyway. I personally don't think the answer will be in any one thing. I think you city people that live within 20-30 miles of work need to consider the electric car an option, those of us that drive vehicles that have the option of diesels probably should consider the option and use as much bio diesel as possible. And by god if you have the option of burning ethanol you should use it. Just consider this a growth period for the ethanol fuel production until they can switch over to cellulosic. When they switch to cellulosic you'll see the price of everything, and i mean everything drop a little. Not alot but a drop none the less.

Don't think for an instant any one thing will take over for oil. We grew far too dependant far too fast to replace it all at once.
 

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I can think of an instant one thing. Ultra capacitors that would allow 400 miles range, at a reasonable price. But that hasnt happened yet.
I agree, however, the purpose of corn ethanol is not to drop the price but to allow an ethanol infastructure to be built, which will in turn allow for other technologies to be cost effective, at least in theory.


There is a guy (zurbin?) out proposing a gov't mendate to make all the cars sold in the US to be flex fuel compatable by some year. According to him, it wouldn't increase the price of the vehicles by much, but would force most of the worlds car manufacturers to go into the switch. I dont much care for the idea of mandates, but this is a better one than many i've heard
 

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I can think of an instant one thing. Ultra capacitors that would allow 400 miles range, at a reasonable price. But that hasnt happened yet.
I agree, however, the purpose of corn ethanol is not to drop the price but to allow an ethanol infastructure to be built, which will in turn allow for other technologies to be cost effective, at least in theory.


There is a guy (zurbin?) out proposing a gov't mendate to make all the cars sold in the US to be flex fuel compatable by some year. According to him, it wouldn't increase the price of the vehicles by much, but would force most of the worlds car manufacturers to go into the switch. I dont much care for the idea of mandates, but this is a better one than many i've heard
Yep, Robert Zurbin and the "Plan to Destroy OPEC"
Here's one of the many articles about it.
 
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