maybe some sanity

[jensend]

http://www.theglobeandmail.com/servlet/story/RTGAM.20080512.wethanol12/BNStory/National/home

then read the comments that have been posted in response to the article:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080512.wethanol12/BNStory/National/home

ethanol is just another dumb idea that coud make someone like adm a lot of money

[Jay-mo]

Alot of flip-flopping happening in this whole ethanol topic. A couple years ago the enviros where screaming, chanting and banging their bongos that we need ethanol to "save the environment". Now ethanol is in the pocket of "big oil"? Give me a break.
I keep harping on it but it needs to be repeated.
When corn is used for ethanol the by-product DDG, which makes up one third of the bulk corn contains 3 times the protein and goes right back into the food chain as cattle feed.
Ethanol has next to nothing to do with food prices.
If anything it is providing a cheap nutricious feed stock for feed-lots across the midwest helping to somewhat dampen the effect of high feed prices.

[Fransisco]

I have said it before and I'll say it again the reason why the lefties are now abandoning the bio fuels ship, that they created with the help of the Al Gore's and David Suzuki's of the world, is that they can't stand the thought of an ADM making money from their idea.

[Fransisco]

And saying ethanol has nothing to do with food prices is just as wrong as saying it has everything to do with them. It is a factor.

There are a lot of livestock producers going out of business these days and a lot more will in the coming months before this is all over and done with. The prices they are getting for their animals are relatively normal, it's the price of feed that's killing them don't pretend that its not.

With one third of all the corn in the US going towards ethanol production its not just a factor its a big one.

[Fransisco]

<blockquote>"CHICAGO, May 9 (Reuters) - U.S. government data on Friday showed there is sufficient corn for the United States to supply itself with food and ethanol through next year, but <b>the outlook hinges on cuts in exports and less of the grain being used as feed</b>." </blockquote>

Less exports means less food for the world, less feed means less animals.

I wouldn't have a problem with this if it were market based. It's not, right now the US government is trying to do an end run around the market.

[jensend]

to me the biggest thing is that this is a negative idea both in terms of energy and economics. i just mentioned adm because it is the biggest ethanol producer in the usa and makes their vertical integration of the value chain more complete. i still think in terms of energy use it would be more efficient to burn the grain to heat your home, hottub or shop than to transport, process the grain and haul out ethanol and byproducts.

[charliep]

There are other factors than straight feedgrain supplies in both ethanol in the price of grain and problems in the livestock industry.

Correction in the value of the US dollar relative to most other currencies has impacted competitiveness. A sixty cent looie would do a lot to make our livestock industry competitive.

You also have to look at the meat consumption/trade side. There is a shortage of pork in China/impact on food inflation but the issue of Paylean/Ractopamine is preventing North American access to this market.

http://www.omafra.gov.on.ca/english/livestock/swine/news/novdec07a2.htm

Only other comment is to watch the second and third generation ethanol technologies as well as improvements in first generation (traditional distilling). Improvements in ethanol efficiency and including the cost of shipping grain around the world will change how the world views this technology.

[Fransisco]

And left on its own the market would decide whether or not it makes more sense to heat your hot tube this way or run your car.

[Fransisco]

You're right the paylean/China issue is a non tariff trade barrier. But it looks like they might just be changing there minds about that.

I'm not so sure about the dollar argument though.

Pork exports out of the US are on fire right now (every one in four pigs) and the low US greenback has a lot to do with that. Reverse the dollar trend and you could very easily reverse the export trend as well. Any currency gain we might see would quickly be lost in an oversupplied North American market.

[charliep]

More referring to the Canadian situation on the dollar. You will may correct me but about 50 % of Canada's pigs (live and meat) are exported (if I remember right). The impact of the loonie has been to make our pig/pork prices lower.