Boost For Ethanol With Obama Support
Stock and Land:
While the Australian ethanol industry is a mere shell of the vision predicted in 2004-05, the American industry has received a much needed boost in the form of support from new US President Barack Obama.
President Obama’s support for the US ethanol industry should flow through to Australian farmers by boosting world grain prices.
That’s because US demand for corn, the prime US feedstock for ethanol, should set a floor in the price for coarse grains.
This, in turn, will spill over into the wheat market.
With crude oil prices currently at less than $US35 a barrel, it is difficult for the US grain-based ethanol to be competitive on the open market.
But US ethanol-use mandates will ensure plants are kept running.
Mr Obama, a staunch supporter of the ethanol industry, is set to leave ethanol mandates established by George W Bush in place.
This is in spite of the US industry coming under increasing criticism from detractors on economic and environmental grounds.
Support from Mr Obama comes at a crucial time for the US ethanol industry.
It’s been struggling over recent years, with plants shutting down and companies going out of business due to uncertainty.
In Australia, not all farming groups are pleased by the development, which will place positive pressure on commodity prices.
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