29 April 2008
Corn Becomes Like Gold
Posted by Joy Bischoff under: World Economy .
Corn Futures Advance to Record as Weather Delays U.S. Planting
By Jae Hur
April 29 (Bloomberg) — Corn futures in Chicago climbed to a record on supply concerns after a government report showed farmers in the U.S., the world’s biggest producer, had planted only half as much as a year ago because of cold, wet weather.
About 10 percent of the corn crop was planted in the top 18 producing states as of April 27, compared with 4 percent a week earlier and 20 percent a year earlier, the U.S. Department of Agriculture said yesterday. Over the past five years, the average for the date has been 35 percent.
“The USDA report is very bullish for corn,” Nicholas Chung, senior manager at Korea Development Bank, said by phone today from Seoul. Any further delay will drive U.S. farmers to switch to soybeans from corn, he said.
Corn for July delivery rose as much as 10.5 cents, or 1.7 percent, to $6.24 a bushel in after-hours electronic trading on the Chicago Board of Trade and stood at $6.215 at 9:14 a.m. Singapore time. It gained 3.9 percent yesterday. The most-active corn contract has gained 69 percent in the past year on record demand for livestock feed and biofuels.
In addition to a threatened corn crop this year, the food buyers have to compete with biofuels. I do not agree with Secretary Rice that biofuels is not a large part of the problem. We are using 30% of our corn crop on biofuels. This drives up corn prices and feed costs for livestock. It is a very big factor.
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Setting aside farmland to produce biofuels like ethanol may be partly to blame for driving up world food prices, US Secretary of State Condoleezza Rice said Monday.
“There has been apparently some effect, unintended consequence from the alternative fuels effort,” Rice told a meeting in Washington when asked for the US government’s view on skyrocketing food prices.
“Although we believe that while biofuels continue to be an extremely important piece of the alternative energy picture, obviously we want to make sure that it is not having an adverse affect,” she said.
“We think that it is not a large part of the problem, but it in fact may be a part of the problem, the ethanol debate,” Rice told a gathering of the Peace Corps.
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13 Comments so far...
Joy Bischoff Says:
29 April 2008 at 2:01 am.
I stole the post below from Cavetrollhead. He posted it under news and comments from yesterday and I thought it went well with this blog:
I stole this from an email. There was much more to it, but I thought this paragraph was compelling:
“Ethanol, as we produce it today, is 20% less efficient than gasoline. It takes 450 pounds of corn to produce enough ethanol to fill the tank of the average American automobile. (Think about that for a minute. It also takes about 450 pounds of corn to feed one person for a year.) It is too corrosive to be shipped via pipeline and must be trucked to distribution points. Added to these negatives…it takes more than one gallon of fossil fuel, coal, oil, or natural gas, to produce one gallon of ethanol.”
I have a great idea! Let’s drill in Alaska, and anywhere in the Gulf of Mexico, and liquefy coal in Utah and so on. It’s so crazy it just might work!
Jesse Says:
29 April 2008 at 2:26 am.
Rice and the rest of the government needs to acknowledge that biofuel competition for corn is a big part of the problem because until they face up to it, it won’t get solved. I can’t imagine what we will do if this persists and things get worse. People expect answers to something as critical as food. We may not be having shortages here but the prices are getting high and from what we are reading they are going higher. With a bad corn crop, other countries competing and higher fuel costs, this could get ugly.
Cavetrollhead Says:
29 April 2008 at 2:28 am.
Sounds like we could use some of that there Global Warming stuff, but just when we needed it darn it if the globe didn’t cool 3/4 degrees C last year. (the biggest dip on record)
Got to hand it to those environmentalists they really are making a difference in the world!
Carrie Says:
29 April 2008 at 11:54 am.
Rush has been talking about gas prices all morning and now he is saying that corn farmers are making record profits and also they are getting subsidies. I didn’t know that. Everything is so mixed up. Why isn’t the government straightening up this mess? Rush says that it is also costing more to feed animals because of the feed. I don’t get how we are going to be okay when we aren’t getting paid higher wages but everything is so expensive and going to get a lot more expensive. I’m a little worried because my parents can’t afford to put me through college. They help a little bit but I have to work and I don’t know how I am going to make it next year. I wish someone would do something.
Benjamin Says:
29 April 2008 at 2:35 pm.
Carrie, the bad news is, I don’t think anyone is going to do anything. The democrats are more worried about global warming and population control than famine. There are biofuel plants popping up all over the country. So much has been invested in them that there wouldn’t be the political will to turn around the mess that has been made. I can’t imagine what is going to happen to make things all right. I think it will take more serious conditions before politicians wake up.
SGS Says:
29 April 2008 at 3:55 pm.
A contributor at American Thinker covers the causes of the food crisis in depth here. In a nutshell, the food crisis happen EACH TIME the government get its hand in the process of food production. Anyway, this article are very specified with some of the current policies (which Rice claimed not to be significant). Rice is an idiot for not thinking this statement (from the article) “Domestic prices of basic foods have risen by 46% over the past year, putting even more pressure on already stressed consumers” is not something to be concerned about. I mean, this statement with its “domestic” is talking about the price WITHIN USA! The sentence immediately following this begins with “Overseas, …” So, again, we are talking about the price within our own stores — it has raised 46% since last year!!! I mean, if you have spent 100 dollars a week for your food last year, you now are spending, on average, 146 dollars for exactly the same shopping list! You are paying 46 dollars more for the same menus you had last year. This is why I do not like Rice — she has been blind with many real issues around the world, and now she is making a statement about something she has no right to do so — she is not a domestic (or more common nowadays, homeland) expert in any way.
Sorry for blah on. Back to this article, it’s great in that it pointed out some solutions we could take IMMEDIATELY, to relieve the pressure on food supply. Worth your time reading, especially if you have been paying attention to a few food-related posts from the past few weeks here. Sadly, as long as any government, especially ours, continue to ignore and try to make things better, the food crisis will be worse and closer to home.
SGS Says:
29 April 2008 at 4:31 pm.
Carrie, not that I want to put damp on your outlook for the living. But, yes, Benjamin is right. There is not really much of a hope from our own government, that they would do the right thing with the current crisises (there are a few crisises beyond food; economy for instance). The legislatives in the government as presently elected will continue to make policy after policy, regulation after regulation, subsidy after subsidy, and they all would only make these crisises worst. Soviet fell because its whole industries, which were heavily regulated, failed. Yes, Reagen recognized those signs, and pushed Soviet over the hill with his military build-up, but he won’t be able to defeat USSR if it was not for their weak industries in the first place.
However, I want to remind you a saying of a wise man. Said he, “I would live as if it [the coming of Lord] were to be tomorrow—but I am still planting cherry trees!” Carrie, you should push through, doing what is necessary for your future. I know it is nice to be able to finish school in four years — this is important. But you also need to recognize your circumstance, and work within it the best you can. For me, it took me 7 years to finish college, because I have no way to support myself. I had to work full-time, along my schooling. Well, to be frankly here, I ended up hitting two birds with one rock. Here was what I did. In my first year, I went to school a full-time, doing the best I can, and get to know a few key players (professors and such) really well. I then used them as my start-point to get my foot in some internships (career center, too, a fantastic place you can start-jump from). I worked as intern at a few places (or any work related to your desired major), all with pay (because of my contacts). I was able to do many of those internships full-time. When I finished school, I got offers from a few places immediately, and at the salary level way above what they pay the newly college graudates (roughly 5 years ahead). Since then, I was able to process much faster and further than my peers. All of that because of my strong background (applying skills as you learn them) and my solid experiences. I would encourage you not to look at things half empty but rather, half full. Just do the best you can, under your and only your circumstance. Evaluate your options, and stuck with one that work best only for you. Do not try to work in the ideal condition, but one that you can manage. You know, here’s a good reminder from the scriptures, “Do not run faster or labor more than you have strength and means… but be diligent unto the end.”
PS: There is a a big bouns here, though, in addition to fantastic career path: I had almost no loan to pay off. That is always nice — to be debt-free!
Concerned American Says:
29 April 2008 at 4:41 pm.
SGS, that was a great article. Here is a paragraph I wanted to share from it:
In fact, none of these claims pass muster. It requires over 400 pounds of corn to produce enough fuel to fill a single automobile tank — enough corn to feed an adult for a year. This is a terrible bargain, particularly after it becomes clear how much corn would be needed to fulfill the eventual mandate of 36 billion gallons a year. That figure would require more agricultural land than the U.S. has got. All the ethanol used today, taking a third of the crop, replaces only 3% of oil imports, a truly pitiful amount. As for expense, ethanol costs more than gasoline to process, to ship, and to store — none of which is ever included in cost calculations. Its supposed effect on hypothetical global warming is similarly exaggerated. With traditional crops, carbon goes right back into the ground; with ethanol, it’s burned and goes into the atmosphere, a net increase for atmospheric CO2. Under some circumstances, it can be far worse. According to a study from Science quoted by William Tucker, clearing land to plant crops for ethanol — as is occurring in Indonesia and Latin America — can increase greenhouse gases as much as 92 times.
Cameron Says:
29 April 2008 at 4:48 pm.
SGS, I am impressed with your story and your advise. I think we can all apply that to our life. Instead of sitting around scared of challenges that are coming, it is nice to read things like this and gather courage from each other to make things work and be prepared. Thanks for sharing what you did. That was a great article from the American Thinker.
Cameron Says:
29 April 2008 at 4:56 pm.
I have really tried being loyal to President Bush. I’ve always liked him and wanted to stay positive even with the border issue bothering me. It is getting harder for me to understand why he is doing some of the things he is doing and what I read in this article really upsets me.
Food scientists say stop biofuels to fight world hunger
By SETH BORENSTEIN, AP Science Writer
WASHINGTON – Some top international food scientists Tuesday recommended halting the use of food-based biofuels, such as ethanol, saying it would cut corn prices by 20 percent during a world food crisis.
But even as the scientists were calling for a moratorium, President Bush urged the opposite. He declared the United States should increase ethanol use because of national energy security and high gas prices.
The conflicting messages Tuesday highlighted the ongoing debate over food and fuel needs.
The three senior scientists with an international research consortium pushing a biofuel moratorium said nations need to rethink programs that divert food such as corn and soybeans into fuel, given the burgeoning worldwide food crisis. The group, CGIAR, is a global network that uses science to fight hunger. It is funded by dozens of countries and private foundations.
If leading nations stopped biofuel use this year, it would lead to a price decline in corn by about 20 percent and wheat by about 10 percent from 2009-10, said Joachim von Braun. He heads the International Food Policy Research Institute in Washington, the policy arm of CGIAR. The United States is the biggest biofuel producer.
He and the other scientists said work should be stepped up on the use of non-grain crops, such as switchgrass, for biofuel.
http://news.yahoo.com/s/ap/20080429/ap_on_sc/food_vs_fuel_1;_ylt=Ar7wMFcOOzw6p9uL4IkkRtEE1vAI
Jeezer Says:
29 April 2008 at 5:17 pm.
I was listening to a great economist last night. He predicted everything that is happening now. I didn’t like what he said but I believe him. Things aren’t going to be getting better any time soon. He did say he believes the government will work hard to keep things from collapsing because Bush won’t want to have that on his record. That is why Bush refuses to admit we are in a recession. People need to get ready now because when gas prices go up even more then so will food and it will be all we can do to just get by. We won’t be able to afford putting away extra.
Matt Says:
30 April 2008 at 9:37 am.
So basically along with the potatoes and winter squash we need to grow a bunch of corn.
Concerned American Says:
30 April 2008 at 1:48 pm.
Siphoning Off Corn to Fuel Our Cars
Across the country, ethanol plants are swallowing more and more of the nation’s corn crop. This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. That has helped farmers like Johnson, but it has boosted demand — and prices — for corn at the same time global grain demand is growing.
And it has linked food and fuel prices just as oil is rising to new records, pulling up the price of anything that can be poured into a gasoline tank. “The price of grain is now directly tied to the price of oil,” says Lester Brown, president of Earth Policy Institute, a Washington research group. “We used to have a grain economy and a fuel economy. But now they’re beginning to fuse.”
Not everyone thinks it’s fantastic. People who use corn to feed cattle, hogs and chickens are being squeezed by high corn prices. On Monday, Tyson Foods reported its first loss in six quarters and said that its corn and soybean costs would increase by $600 million this year. Those who are able, such as egg producers, are passing those high corn costs along to consumers. The wholesale price of eggs in the first quarter soared 40 percent from a year earlier, according to the Agriculture Department. Meanwhile, retail prices of countless food items, from cereal to sodas to salad dressing, are being nudged upward by more expensive ingredients such as corn syrup and cornstarch.
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