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Ethanol Is A Force In The Dynamic, Volatile Ag Market
By Mr Ethanol | March 27, 2008
Daily Republic:
Agricultural economist Michael Swanson told area farmers Wednesday that ethanol has become a driving force in today’s dynamic, yet volatile, agriculture marketplace.
Swanson told a rapt farming audience during a Wells Fargo appreciation dinner at Dakota Wesleyan University that an inextricable relationship has grown between agriculture, energy and land.
“That relationship is driving your agricultural world today,” he said, making the point that energy is not only an expense for today’s farmer and consumers, “but it also sets the value of crops.”
“Crude oil sets gasoline, gasoline sets ethanol and ethanol sets the value of everything in agriculture today,” he said, adding that land makes up 85 percent of all of today’s agricultural assets. Land prices will continue rising, he predicted, along with the demands for energy.
“Where crude oil goes, so goes agriculture,” said Swanson, a Wells Fargo vice president.
He said high prices for gasoline have actually flattened the demand for oil, which generally would mean a downward pressure on prices. But Swanson believes OPEC will control supplies to at least keep oil at the $90-a-barrel mark.
That should also mean a strong market for ethanol, he said, and a bullish outlook for agriculture, except for the problem of input costs.
“Those who see farmers rolling in cash are neglecting input costs,” Swanson said.
Fertilizer, which sold for $250 a ton in early 2007, is selling for $1,075 a ton today. Fertilizer suppliers correctly read the demand for more corn, said Swanson, and they did the math. Full article.
Topics: Agriculture, Ethanol, Market, News |
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