Husky Ethanol Plant Importing Corn

[Ron]

Good to see you back Vader.

[BFW]

Fundamentally, I believe that if corn needs to come to feed livestock or supply an ethanol plant during times of shortages then so be it. The question that needs to be asked is why should taxpayers subsidize ethanol production in Canada if that production capacity has to rely on imported grain to do it?

[charliep]

Just a couple of comments. Don't know if the above is true (just back from holidays in beautiful BC) but will assume it is.

Grain producers will never have a higher value than when you are pricing on an import basis- price somewhere else plus cost to get it here. Normally, we are priced on a export basis - price where the grain is used minus cost to get it there. Lots of other factors in western Canada like ability to deliver to export market/CWB delivery contracts but this is the normal market function.

Also highlights the challenges of filling the supply needs of a value added processor. Husky at Lloydminster's capacity is about 350,000 tonnes a year or for nice round numbers 1,000 tonnes per day (25 B trains if you like). The unit train is likely about 90,000 tonnes or enough to keep the ethanol plant running for about 3 months. From Husky's side, what would it take to source that kind of volume from farmers over the summer?

A final comment is do we really understand the grain needs and specific quality/variety needs of an ethanol plant? How good a fit is CWRS for ethanol production? What impact does protein have? Gluten? Grade factors like sprout and frost damage?

[TOM4CWB]

Dear Charlie,

I think you skipped a cog on how much a unit train holds!

@ 90t/car... times 100 cars... that is 9000t not 90,000t! 9 days supply... not 90 days!

[wd9]

That darn BC sun!

[charliep]

Thanks for the correction. Maybe explains why my golf scores were so bad.

[wilagro]

Face it you wheat farmers...Husky is going to keep on buying more corn UNLESS you lower your price to the point where you LOSE money.

Ain't free enterprise AND choice wonderful? You are screwed...Husky has turned the tables on you, at least for now.

Somehow, I didn't believe all of the glowing reports about how Husky was going to SUPPORT agriculture with their ethanol plant. Too bad, but so sad.

Solution: Best you can do is invest in CORN futures.

Hahahahahahahahahahahahahahahah

[charliep]

wilagro

Choice is good. You can sell to Husky (and domestic feeders) or you can sell to the CWB. Which one of these alternatives will put more money into your pocket today?

[BennyHin]

If i was in charge of Husky at Lloyd, I too would rather buy 100 cars at a time of US corn rather than to deal with the administration of paying local farmers on the basis of single truck unloads.


For example:

1 train equals 9000 tonnes. Husky cuts a single cheque. done.

versus buying wheat from local producers:

It would require approximately 260 trucks at an average unload weight of 35 tonnes each to match the unit train's unload.

Just think about it: If husky orders a unit train of 100 cars of corn from Iowa, they are guaranteed uniformity for the entire lot. If the corn doesnt meet contract specs, they send it back.

Whereas taking delivery from local farmers of red winter, prairie spring, western red, soft white wheat, etc, this will increase their admin costs, as well result in inefficiencies in the ethanol conversion process if the wheat quality is variable. I.e. Every truck is of different quality, and if it is raining or snowing, local farmers cannot deliver on time.

Unit trains are easier.

[ColevilleH2S]

I'm all for competition, and if they can import corn for less than my low Px Wheat all the power to them. I can find another market. But the numbers don't add up, I still don't see how relativly high priced corn plus frieght is cheaper than our discounted wheat. Is corn 30% more effient at coverting to ethanol than wheat is? Is CN charging them less to haul corn in than the $40tonne they charge us to haul wheat out? Can anyone confirm this story???