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Ethanol’s Bubble Hasn’t Burst Yet
By Mr Ethanol | November 9, 2007
Kane County Chronicle:
When ethanol futures prices took a dive this summer to about $1.50 a gallon, some raised questions about the growth prospects of the corn-based biodiesel.
Corn farmers already have seen demand from ethanol producers more than double since 2004, and this marketing year, ethanol is expected to surpass exports to become the second largest use of U.S. corn.
But as farmers have invested in the glittering prospects of the biodiesel by upping their corn acreage, and an ethanol plant construction boom bumped up supply, ethanol prices have come down from their 2006 highs.
“It’s a little disappointing,” said Bob Gehrke, president of the Kane County Farm Bureau.
Local farmers get a lower price for their corn crops from regional ethanol plants than they do when destined for exports or food manufacturing, Gehrke said.
But expect things to settle down this spring. The late-summer glut was simply part of the industry’s growing pains, said Joe Victor, vice president of marketing at Allendale Inc., a commodities research and brokerage firm. Nationwide, several ethanol plants in the pipeline reportedly are holding off on construction, and supplies likely will better match demand in the future, he said.
Ethanol futures prices are back up to $1.84 a gallon, in part because of rising crude-oil prices, and corn farmers still are seeing high prices for their crops thanks to strong exports and demand for corn-based food products.
“It was too fast, too strong,” Victor said. “Everybody was trying to get to the front first.”
Gehrke said he expected a minor decrease in corn planting next year among local farmers…
Topics: Agriculture, Ethanol, News |
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