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Should the Ethanol Bubble Burst? Locked

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Posted by Anonymous on Monday, April 21, 2008 9:13 PM
 solzrules wrote:
 RRKen wrote:
 solzrules wrote:
[

In either case, I will fully admit that he was wrong with regards to the ethanol mandates and subsidies that have passed under his watch. 

 

Blame Jimmy Carter for the subsidy.  The current administration/congress lowered it.

Not quite....

www.washingtonpost.com/wp-dyn/content/article/2007/01/24/AR2007012401869.html

 

Bush in his 2007 state of the union actually discussed raising the mandate.  At the very least he is a big cheerleader of ethanol. 

If only he was a true conservative......

Didn't he also jump onto the climate change bandwagon just a few days ago?

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Posted by solzrules on Monday, April 21, 2008 9:08 PM
 RRKen wrote:
 solzrules wrote:
[

In either case, I will fully admit that he was wrong with regards to the ethanol mandates and subsidies that have passed under his watch. 

 

Blame Jimmy Carter for the subsidy.  The current administration/congress lowered it.

Not quite....

www.washingtonpost.com/wp-dyn/content/article/2007/01/24/AR2007012401869.html

 

Bush in his 2007 state of the union actually discussed raising the mandate.  At the very least he is a big cheerleader of ethanol. 

If only he was a true conservative......

You think this is bad? Just wait until inflation kicks in.....
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Posted by RRKen on Monday, April 21, 2008 8:18 PM
 solzrules wrote:
[

In either case, I will fully admit that he was wrong with regards to the ethanol mandates and subsidies that have passed under his watch. 

 

Blame Jimmy Carter for the subsidy.  The current administration/congress lowered it.

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Posted by solzrules on Monday, April 21, 2008 6:35 PM
 Convicted One wrote:

 solzrules wrote:
or it means that the people who got duped by an idiot probably mess themselves due to their own incredible lack of intelligence. 

 

Never underestimate anyone!!  

 

Actually tho, you must realize that it's typical for a person to regard anyone who they disagree with as "stupid"...it's an abstract way to discredit those who see things differently than the primary subject might.

So, it's entirely plausible for "some stupid guy"  to mislead us, because he might be proficiently dishonest to boot. oR possibly  possess the "forrest gump factor".

Or the idiot could be working with brilliant  (as well as proficiently dishonest) advisers and henchmen

 

 

Or, it could be that he was right and those who would discredit him are trying very hard to prove that he wasn't.  Given the track record since 01, I tend to agree with him vs. the 'let's pull everything out now and give them a hug' crowd.

In either case, I will fully admit that he was wrong with regards to the ethanol mandates and subsidies that have passed under his watch.  This is nothing more than a handout using my tax dollars.  I expect better of my politicians, but fully anticipate the worst.  When money gets involved everyone loses. 

You think this is bad? Just wait until inflation kicks in.....
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Posted by Convicted One on Monday, April 21, 2008 4:42 PM

 solzrules wrote:
or it means that the people who got duped by an idiot probably mess themselves due to their own incredible lack of intelligence. 

 

Never underestimate anyone!!  

 

Actually tho, you must realize that it's typical for a person to regard anyone who they disagree with as "stupid"...it's an abstract way to discredit those who see things differently than the primary subject might.

So, it's entirely plausible for "some stupid guy"  to mislead us, because he might be proficiently dishonest to boot. oR possibly  possess the "forrest gump factor".

Or the idiot could be working with brilliant  (as well as proficiently dishonest) advisers and henchmen

 

 

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Posted by RRKen on Sunday, April 20, 2008 10:58 PM

 Convicted One wrote:
Talked to any grain elevator operators in the past few years? Those whom I have spoken with freely attribute the rise in price of feed corn to the ethanol boom. You really can't say  that they are just responding as media pawns, because they are an empirical source. 

The farmers and elevators I talk  with say they are glad they have choices other than marketing to export or processors.  They can afford to be choosy when it comes to taking grain in, and marketing it.   No more do they have to settle for markets that barely pay the freight such as ADM and Cargill or some PNW feed mills. 

More later. 

 Convicted One wrote:
It would be interesting to see a tabulation of the expansion in sales  over the past few years for the "post ethanol" mash feed... I don't know anyone selling the stuff, but just being honest I have not looked for it either

 As soon as I assemble the data, I will post it.

 

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Posted by Anonymous on Sunday, April 20, 2008 4:51 PM
 solzrules wrote:
 Convicted One wrote:
 solzrules wrote:
I tend to think the opposite will happen, but then again, like any good conspiracy nut, Dick Cheney blew up the WTC, Bush is a moron that duped democrats into a war, and Lee Harvey Oswald was only a pawn in a massive effort by the CIA, the mob, the Cubans, the Russians, the Chinese, and the Republicans to kill JFK. 

I should shoot a movie.  Solz Oliver Stone........

 

I tend to favor the wisdom presented in Poppa_Zit's  current signature. People should not be entitled to their own facts. Not even presidents. In fact if Americans had just been smart enough to scoff at W's far fetched claims that Saddam had WMD...there would be no Iraqi war.

Perhaps.

My point was that so many people like claim that our president is an idiot, yet in the same breath they like to claim that they were misled by that same idiot into a war. 

Logically (I realize that goes out the window with politics) either this doesn't make sense, or it means that the people who got duped by an idiot probably mess themselves due to their own incredible lack of intelligence. 

It sure makes for a great conspiracy theory.  Hopefully a movie will come out soon to that effect that will validate my wild theories.  They can call the movie "W" or something. 

 

 

W must be a sneaky idiot.

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Posted by solzrules on Sunday, April 20, 2008 4:45 PM
 Convicted One wrote:
 solzrules wrote:
I tend to think the opposite will happen, but then again, like any good conspiracy nut, Dick Cheney blew up the WTC, Bush is a moron that duped democrats into a war, and Lee Harvey Oswald was only a pawn in a massive effort by the CIA, the mob, the Cubans, the Russians, the Chinese, and the Republicans to kill JFK. 

I should shoot a movie.  Solz Oliver Stone........

 

I tend to favor the wisdom presented in Poppa_Zit's  current signature. People should not be entitled to their own facts. Not even presidents. In fact if Americans had just been smart enough to scoff at W's far fetched claims that Saddam had WMD...there would be no Iraqi war.

Perhaps.

My point was that so many people like claim that our president is an idiot, yet in the same breath they like to claim that they were misled by that same idiot into a war. 

Logically (I realize that goes out the window with politics) either this doesn't make sense, or it means that the people who got duped by an idiot probably mess themselves due to their own incredible lack of intelligence. 

It sure makes for a great conspiracy theory.  Hopefully a movie will come out soon to that effect that will validate my wild theories.  They can call the movie "W" or something. 

 

 

You think this is bad? Just wait until inflation kicks in.....
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Posted by solzrules on Sunday, April 20, 2008 4:41 PM
 RRKen wrote:

Foodstuffs from corn that require Starch:

  • Corn Starch
  • Corn meal
  • Citric acid
  • Frozen Pizza crust
  • Corn syrup
  • Breakfast cereals
  • Snack chips
  • Marshmallows
  • Ice Cream
  • Graham crackers
  • Candies
  • Puddings
  • Asprin
  • Baked Goods
  • Soda
  • Fruit fillings
  • Frostings
  • Pancakes
  • Toppings
  • Relishes
  • Chewing gum
  • Bologna
  • Hot dogs
  • Medicinal syrups
  • Pickels
  • Seasoning Sauces
  • Baking powder
  • Intravenous solutions
  • Soups
  • Cured meats
  • Canned fruits
  • Cheese spreads
  • Jams
  • Lactic acids
  • Essential Amino acids
  • Tortillas

Lots of products, all requiring corn, specifically starches which are converted to corn syrup and dextrose.

Man that's funny.

Isn't all of the stuff getting more expensive? 

It's almost like we're restricting the supply of corn by using it for something else or something....

You think this is bad? Just wait until inflation kicks in.....
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Posted by Convicted One on Sunday, April 20, 2008 2:28 PM
 RRKen wrote:
Let's look at the stats from 2007.
  • 13.318 Bbu of corn harvested.
  • 5.6 Bbu of corn went to domestic Animal feed.
  • 2.1 Bbu of corn went to Export.
  • 753 Mbu of corn went to domestic Corn Sweeteners.
    • 3.5 Mbu of corn in that total went to produce corn oils.
    • 29.4 Mbu of corn from that total went to Animal feed.
  • 2.1 Bbu of corn went to the domestic Ethanol industry. (53.34 million metric tonnes)
    • 787 Mbu of corn became DDGs. (20 million metric tonnes)
  • 272 Mbu of corn went to domestic processors for food or starches.
    • 190 Mbu of corn went to breakfast cereals, snack chips, tortillas, and other foods
    • 173 Mbu of corn went to the Fermented Beverage industry.

This used 10.825 Bbu of corn in crop year 2007.   That left 1.675 Bbu of corn in store give or take, an increase of 656 Mbu. over 2006.   (USDA September 6th report of corn sales)

 

Thanks for the wealth of information

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Posted by Convicted One on Sunday, April 20, 2008 2:17 PM

 Bucyrus wrote:
 But I don't know if that would be sufficient to explain the media driven notion that ethanol is driving up food prices.       

 

I'm not sure that it's fair to typify the entire concept as "media driven".

Talked to any grain elevator operators in the past few years? Those whom I have spoken with freely attribute the rise in price of feed corn to the ethanol boom. You really can't say  that they are just responding as media pawns, because they are an empirical source. 

It would be interesting to see a tabulation of the expansion in sales  over the past few years for the "post ethanol" mash feed... I don't know anyone selling the stuff, but just being honest I have not looked for it either

 

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Posted by RRKen on Sunday, April 20, 2008 12:39 PM

Foodstuffs from corn that require Starch:

  • Corn Starch
  • Corn meal
  • Citric acid
  • Frozen Pizza crust
  • Corn syrup
  • Breakfast cereals
  • Snack chips
  • Marshmallows
  • Ice Cream
  • Graham crackers
  • Candies
  • Puddings
  • Asprin
  • Baked Goods
  • Soda
  • Fruit fillings
  • Frostings
  • Pancakes
  • Toppings
  • Relishes
  • Chewing gum
  • Bologna
  • Hot dogs
  • Medicinal syrups
  • Pickels
  • Seasoning Sauces
  • Baking powder
  • Intravenous solutions
  • Soups
  • Cured meats
  • Canned fruits
  • Cheese spreads
  • Jams
  • Lactic acids
  • Essential Amino acids
  • Tortillas

Lots of products, all requiring corn, specifically starches which are converted to corn syrup and dextrose.

I never drink water. I'm afraid it will become habit-forming.
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Posted by Convicted One on Sunday, April 20, 2008 12:21 PM
 solzrules wrote:
I tend to think the opposite will happen, but then again, like any good conspiracy nut, Dick Cheney blew up the WTC, Bush is a moron that duped democrats into a war, and Lee Harvey Oswald was only a pawn in a massive effort by the CIA, the mob, the Cubans, the Russians, the Chinese, and the Republicans to kill JFK. 

I should shoot a movie.  Solz Oliver Stone........

 

I tend to favor the wisdom presented in Poppa_Zit's  current signature. People should not be entitled to their own facts. Not even presidents. In fact if Americans had just been smart enough to scoff at W's far fetched claims that Saddam had WMD...there would be no Iraqi war.

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Posted by Tharmeni on Sunday, April 20, 2008 2:41 AM
This topic is comical as the price of gasoline gets more and more expensive.  I stopped by Sam's Club yesterday and filled up at $3.39/gallon - went inside and did about 15 minutes of shopping and when I went back outside, it was $3.41/gallon.  No fuel truck had pulled in with "new" fuel, it's just what we're willing to pay. 
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Posted by Anonymous on Saturday, April 19, 2008 11:15 PM
 Murphy Siding wrote:
 Bucyrus wrote:

QUESTION:

How many pounds of corn does it take to make one pound of byproduct, and what is the value and nutrition content of that quantity corn, compared to the value and nutrition content of the one pound of byproduct?

If there is more nutritional value in the pound of byproduct than in the presumably greater quantity of corn that it took to make the pound of byproduct, then it would be easy to see how ethanol production would not be reducing the corn feed supply.  However, this does strike me as a sort of nutritional perpetual motion machine.  If this were possible, I would think corn would have been converted to DDG prior to the ethanol boom even if ethanol were not made in the process and there were no subsidy. 

Well........If we were playing poker, I guess this would be the point where I fold and say "I'm outta here". Headphones [{(-_-)}]  I think Rairoad Ken's post above says that the nutrition remains the same, it's just the starch taken out.  If so, it's a wash.  To get technical answers beyond that, is asking a lot for members of a trains forum.

     Remember this:  No matter what ethanol is now, or will be in the future, it was started for one purpose-to expand the market for the corn farmer's crop, and raise the price he could sell the corn for.  It has succeeded.

     I gotta get back to railroad subjects- a lot more fun to talk about than ethanolTongue [:P]

If RRKen is correct, it does sound like ethanol is produced from corn with no actual consumption of the corn in terms of its food value as animal feed.  Therefore the diversion of corn to ethanol production cannot possibly be contributing to the rapidly rising cost of milk, eggs, chicken, and beef because, although the corn is diverted to ethanol, its total food value is retained and returned for use as animal feed. 

Perhaps there is some other loss of field corn based food derivative that is consumed directly by humans such as the corn sweetener mentioned by Convicted One.  But I don't know if that would be sufficient to explain the media driven notion that ethanol is driving up food prices.  It may be that they are just fanning the flames of another crisis.  Maybe they are sowing the seeds of the food price bailout while ignoring the damage they are doing to ethanol in the process.  It does seem like the only two commodities that are being constantly cited as inflationary these days are energy and food.     

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Posted by solzrules on Saturday, April 19, 2008 11:08 PM
 RRKen wrote:
 Convicted One wrote:

 solzrules wrote:
And the same could be said about you.  There is no market for this product, only a law stating that we have to use it.  Don't you find it interesting that ethanol became a big deal AFTER the gov decided we have to use it in gas?  Seems to me the economics weren't there before, and there aren't there now.  The only thing that has changed is the politics.

 

Ethanol is great for the businesses who harness the subsidies, and the related industries that service those businesses.

When I refer to the spreadsheet produced in 2003 by the University of Minnesota by Douglas G. Tiffany, it is noted that he finds a positive balance on operations, without adding subsidy.   That includes his local state small producer subsidy, Federal small producer subsidy, and the CCC Bioenergy credit.   At that point, he was dealing with $2.20 corn, and seeing a revenue of $4.1029 per bushel revenue. 

Today, when you plug in the variables, there is still profit shown, however that margin is razor thin, again, not including producer subsidies.  The two biggest variables for most dry-grind plants are fuel and corn.    Now that corn is in the $5.00 range, and natural gas, for those who use it, is currently above $9 per million BTU from $4.50 per in 2003.  (Wellhead price currently averages $8.06/MMBtu.) 

That is a huge increase of inputs.  The sales of Ethanol and DDGs has covered it because they both trend other commodities (gasoline and corn respectively).  Current futures prices traded at the CBOT show $2.55 per gal. for ethanol.  That is well below what is actually being sold.  For example, IL is at $2.578 according to DTN.   In the spreadsheet, that along with DDGs prices still creates a positive balance.  

 So is there a need for subsidies?   My feeling is no.   However if you take away those producer subsidies, future investment in the industry will be quashed.  But that was the original reason Carter signed into law those subsidies in 1978 (Energy Tax Act of 1978).  Fuel Blenders tax credits appeared in the Windfall Profits Tax Act of 1980.  The Energy Security Act of 1980 added a goal of increased Ethanol production, and $1 billion in loan guarantees.   Before someone screams ADM, let me remind you that of the large producers, ADM did not have near the capacity it has today.  They purchased corn processors such as Clinton Corn Products, and others which eventually added that capacity.  This happened well after 1980.  Sorry folks, nice try. 

In closing, if the producer subsidies went away, ethanol would survive if oil would remain above $60 bbl. 

Let me be absolutely clear, the only way I know how (hee hee political junkies should know what that means....)

There is a big difference between a subsidy and a mandate. 

The mandate creates the market for the ethanol.  If there is no mandate, there is no market. 

Some can claim that I'm a conspiracy nut (murray....), but it is simple economics.  Pass a law requiring the use of a product, and lo and behold suddenly there is a market for that product whether it is subsidized or not. 

Here's the solution:  Stop requiring the use of ethanol in gas.  IF it is such a great idea, it should have no problem selling itself in an open market.  'Green' consumers will continue to demand E85 flex fuel vehicles and gladly look for the gas stations that sell 10% ethanol fuel with the knowledge that they are saving the world, 15 mpg at a time. 

I tend to think the opposite will happen, but then again, like any good conspiracy nut, Dick Cheney blew up the WTC, Bush is a moron that duped democrats into a war, and Lee Harvey Oswald was only a pawn in a massive effort by the CIA, the mob, the Cubans, the Russians, the Chinese, and the Republicans to kill JFK. 

I should shoot a movie.  Solz Oliver Stone........

You think this is bad? Just wait until inflation kicks in.....
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Posted by Murphy Siding on Saturday, April 19, 2008 9:53 PM
 Bucyrus wrote:

QUESTION:

How many pounds of corn does it take to make one pound of byproduct, and what is the value and nutrition content of that quantity corn, compared to the value and nutrition content of the one pound of byproduct?

If there is more nutritional value in the pound of byproduct than in the presumably greater quantity of corn that it took to make the pound of byproduct, then it would be easy to see how ethanol production would not be reducing the corn feed supply.  However, this does strike me as a sort of nutritional perpetual motion machine.  If this were possible, I would think corn would have been converted to DDG prior to the ethanol boom even if ethanol were not made in the process and there were no subsidy. 

Well........If we were playing poker, I guess this would be the point where I fold and say "I'm outta here". Headphones [{(-_-)}]  I think Rairoad Ken's post above says that the nutrition remains the same, it's just the starch taken out.  If so, it's a wash.  To get technical answers beyond that, is asking a lot for members of a trains forum.

     Remember this:  No matter what ethanol is now, or will be in the future, it was started for one purpose-to expand the market for the corn farmer's crop, and raise the price he could sell the corn for.  It has succeeded.

     I gotta get back to railroad subjects- a lot more fun to talk about than ethanolTongue [:P]

Thanks to Chris / CopCarSS for my avatar.

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Posted by zugmann on Saturday, April 19, 2008 9:24 PM

Ah. Misread you there.

But yeah... I love people who live in areas where the hybrids do nothingbut bo ost their self ego.  Nor do I understand the concept of the hybrid tahoe either.  You want a truck that size, you're going to have to pay for gas.     

 

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by edblysard on Saturday, April 19, 2008 9:15 PM

And so are you..I was agreeing with you, that buying something simply because it is the fad, or a statement, is silly, and that a lot of people who do purchase paticular automobiles, such as the "I'm a better person than you because I drive a hybrid" are simply wasting money...it is possible to make a gasoline engine economical.

 

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Posted by zugmann on Saturday, April 19, 2008 8:50 PM

where in my post did I say everyone that buys one is making a trendy statement?  I did not sir.  I was using that as an example to show that some people are willing to spend the extra money on something that is perceived as "trend, fashionable or hip".  Like the guy that buys the Silverado to carry a coat of wax.  I was responding to the point that no one should spend the extra money for a flex-fuel vehicle.

 You are reading way too far into it.

 

 

 

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by edblysard on Saturday, April 19, 2008 8:17 PM

Funny,

My "trendy" 5.7 liter Hemi with MDS in a 2005 Magnum station wagon managed to get 31 mpg from Houston, Texas to Lincoln Nebraska two years ago, at an average speed of 75 mph.

On the return, it got 32 mpg, at the same average speed.

It didn't like the tank of gas we filled up with in Lincoln; it was at least a 10% ethanol blend.

My daily average mileage is 27 mpg freeway, and 18 to 22 mpg "city" driving.

All this in a car that weighs a little over 4000 lbs.

So it is possible to make a usable "large" car that is economical to drive.

 

Oh, and not everyone who drives a SUV is making a fashion statement, some of us actually purchased the things because we use them...all the time in fact, unlike the guys who buy the re ugly-fied Chevy pick up, only to never fill the bed up with anything but beer cans.

 zugmann wrote:
And this would be different from how it was trendy to buy a SUV? or how it is trendy to buy a "HEMI", or trendy to buy a hybrid...

Simple name of the game, the vehicle will still function. Sure they may have cost more - but people are willing to pay MSRP on a new car when they order it, instead of waiting until the end of the model year (or even, gasp, buy it used). Look at how many people had to rush out and buy a new chevy truck because they re-uglified the front end.

This isn't like a CNG vehicle that is useless without the CNG filling station. Or even the joke known as hydrogen.

The best thing about the corn ethanol is that it has started the ball rolling. YOu need that first influx of cash. Most of the new plants can be easily converted to process other biosources other than corn. But it is the corn which will and has gotten the shovel into the ground to start building some plants. You can examine all the alternative fuel ideas you want, they all look good on paper. But unless your car can run on those books and pamphlets - the real difference won't be felt until something is built. I do not consider corn ethanol the solution. But in America, we need to take baby steps. The sheeple here are afraid of change, so we must lead them slowly. But we also have to have something concrete to show them that it can be done. The E85 pumps at the gas station will convince people a lot more than Arnuld riding around in his hydrogen powered Hummer.

 Convicted One wrote:
 zugmann wrote:

Or if the ethanol business goes away completely (which I doubt), those people in their E85 compatible cars will just be running them off of regular gasoline. Only thing different would be the faded decal on the trunk.   

 

 

No, one OTHER THING that will be different will be the premium price they were duped into paying for a trendy-gone obsolete "flexi-fuel" pie in the sky vehicle

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Posted by RRKen on Saturday, April 19, 2008 6:01 PM
 Bucyrus wrote:

I see mostly reasoned arguments here although I don't believe we have quite yet come to a resolution.  Nevertheless, it has been a multifaceted discussion.  The question of whether the ethanol bubble will burst raises the question of what would cause it to burst. 

Government subsidies don't easily end because they represent an expansion of government, which is in the government's self interest.  So subsidies have inertia.  Therefore I don't expect that there will be an ending of subsidy which will burst the ethanol bubble.  A far greater threat to the bubble is the unforeseen consequence of shorting the food supply in favor of ethanol.

If ethanol production is forcing food prices up as much as many sources indicate, this will soon lead to a crisis exceeding the fuel crisis.  Even before the food price run-up, many families spent more for food than they did for fuel.  Soon, if not now, food will be rising in price faster than fuel.  Ethanol production is just in its infancy compared to what is proposed.  What will food cost 5-8 years from now when ethanol production has ramped up, and expanded many hundreds of percent? 

Ethanol expansion has slowed, and will slow as long as investment slows.  A major portion of the increase of food costs, is fuel; i.e. diesel and gasoline, and the world market.   There have been a large shortfall of grain production in the world relative to the U.S. crop.  Add to it, the value of the U.S. dollar, and grain is quite a bargain in other countries.  

Will those other countries who's production was far below expectations last season make up for it this year?   We don't know that.  So call it a variable.   Will the cost of transport of grains increase?  We don't know that either, another variable.    Will the dollar stabilize?  Whoops, another variable. 

 And any one of these variables do impact U.S. ethanol production.   If those variables change, exactly how will that impact U.S. corn prices? 

 Bucyrus wrote:
That is easy to predict.  The government will treat itself to the administration of yet another wealth transfer subsidy.  This time it will be a federal bailout of the victims of high food prices.  Socialized food and socialized fuel will soon join socialized medicine as being the priority vectors of expanding the public sector.

I looked hard at everything involved.   My decision is the same now as it was in 2002/03, that I just don't know. 

 You are correct about subsidies.  The Airlines, Amtrak, Trucking companies, even corn growers (in bad years),  would shrivel up and die if the subsidies were pulled.   (Unless the public would absorb those product increases due to loss of subsidy.)  They are self-serving to those who take our tax money for them.   What is needed is a study of each to examine the outcome of removing subsidies.   A topic far from this debate is if the farmers could survive if all subsidies were removed, and price dropped under the cost of production.   That impact would be huge.  (I well remember a conversation with a Guckeen, MN farmer in 1998 when Cargill offered him $1.82 per bushel, and ADM $1.76 per, far less than what it cost him to grow {$2.12}.) 

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Posted by RRKen on Saturday, April 19, 2008 5:38 PM
 Bucyrus wrote:
QUESTION:

 

How many pounds of corn does it take to make one pound of byproduct, and what is the nutrition content of that quantity of corn, compared to the nutrition content of the one pound of byproduct?

 One bushel of corn  creates 1/3rd bushel of DDGs.   But, DDGs concenrtates nutrients 3 fold versus corn.   What is missing is the starch.  So one bushel of DDGs contains more protein, energy, and other nutrients versus one bushel of dry milled corn. 

 One must again state, that DDGs as a feed is not universally the same for different animal species.   For cattle, DDGs has an energy content higher than corn, however with poultry, it does not.   There are many variables in the production of DDGs such as drying time, temperatures, and amount of soluables that are added back to the product.  Mash times, enzyme use, distillation process also are variables.   

There is much research to improve the quality and dynamics of DDGs.  One such research has lead to the production of HP-DDGs which separates the germ prior to ethanol production, and blends it back with the byproduct to increase Protein levels.  Also as I past mentioned, corn oil extraction will change the fat content of DDGs while improving flowability.    It is unclear yet the cost impact to the processing plant or it's profitability.

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W. C. Fields
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Posted by RRKen on Saturday, April 19, 2008 4:44 PM

 Convicted One wrote:
Grass is fed to range fed beef, n'est pas?

Actually, field corn already IS a very big part  of the   human  consumption food chain...can you say "High Fructose Corn Syrup?...sure...I knew you could.

Coke and Pepsi are spending big bux in fact trying to create alternative sweetening agents SPECIFICALLY BECAUSE of the effect ethanol4fuel  is having on their raw materials

While further, field corn can be ground into a nutritous cornmeal that very well COULD sustain human diet.

Let's look at the stats from 2007.

  • 13.318 Bbu of corn harvested.
  • 5.6 Bbu of corn went to domestic Animal feed.
  • 2.1 Bbu of corn went to Export.
  • 753 Mbu of corn went to domestic Corn Sweeteners.
    • 3.5 Mbu of corn in that total went to produce corn oils.
    • 29.4 Mbu of corn from that total went to Animal feed.
  • 2.1 Bbu of corn went to the domestic Ethanol industry. (53.34 million metric tonnes)
    • 787 Mbu of corn became DDGs. (20 million metric tonnes)
  • 272 Mbu of corn went to domestic processors for food or starches.
    • 190 Mbu of corn went to breakfast cereals, snack chips, tortillas, and other foods
    • 173 Mbu of corn went to the Fermented Beverage industry.

This used 10.825 Bbu of corn in crop year 2007.   That left 1.675 Bbu of corn in store give or take, an increase of 656 Mbu. over 2006.   (USDA September 6th report of corn sales)

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W. C. Fields
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Posted by Anonymous on Saturday, April 19, 2008 3:57 PM
 Murphy Siding wrote:
 Bucyrus wrote:
 RRKen wrote:

 You folks need to learn how to read with your eyes open for a change.  

 Corn in.   Byproduct out.  Byproduct fed to animals as feed.   Cheaper than whole grain corn.

 What part of that don't you understand???????

This part:

 

Given that:

 

1)    The byproduct is cheaper than corn.

 

2)    The byproduct has higher nutrition content than corn.

 

QUESTION:

 

How many pounds of corn does it take to make one pound of byproduct, and what is the nutrition content of that quantity of corn, compared to the nutrition content of the one pound of byproduct?

If the cattle producers around here are buying the byproduct to feed, instead of the corn, does that sort of answer the question?

No.  That answers the question about the economic viability of byproduct DDG as feed.  I have no doubt about its economic viability.  DDG is a waste product from ethanol production which itself is a subsidized industry.  It makes sense that DDG would be cheap, if not free.  Moreover, as RRKen has pointed out, DDG has a higher nutritional content than the corn that would have been feed to animals if it had not been diverted to ethanol production.   But this is about the economics of using DDG.  I want to know if there is a reduction in the corn supply used in food production as animal feed because corn is being diverted to ethanol production.  There may be other uses for field corn besides animal feed, but my question pertains only to animal feed since that is where DDG is substituted for corn.  This was my question: 

 

QUESTION:

How many pounds of corn does it take to make one pound of byproduct, and what is the value and nutrition content of that quantity corn, compared to the value and nutrition content of the one pound of byproduct?

If there is more nutritional value in the pound of byproduct than in the presumably greater quantity of corn that it took to make the pound of byproduct, then it would be easy to see how ethanol production would not be reducing the corn feed supply.  However, this does strike me as a sort of nutritional perpetual motion machine.  If this were possible, I would think corn would have been converted to DDG prior to the ethanol boom even if ethanol were not made in the process and there were no subsidy. 

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Posted by RRKen on Saturday, April 19, 2008 3:25 PM
 Convicted One wrote:

 solzrules wrote:
And the same could be said about you.  There is no market for this product, only a law stating that we have to use it.  Don't you find it interesting that ethanol became a big deal AFTER the gov decided we have to use it in gas?  Seems to me the economics weren't there before, and there aren't there now.  The only thing that has changed is the politics.

 

Ethanol is great for the businesses who harness the subsidies, and the related industries that service those businesses.

When I refer to the spreadsheet produced in 2003 by the University of Minnesota by Douglas G. Tiffany, it is noted that he finds a positive balance on operations, without adding subsidy.   That includes his local state small producer subsidy, Federal small producer subsidy, and the CCC Bioenergy credit.   At that point, he was dealing with $2.20 corn, and seeing a revenue of $4.1029 per bushel revenue. 

Today, when you plug in the variables, there is still profit shown, however that margin is razor thin, again, not including producer subsidies.  The two biggest variables for most dry-grind plants are fuel and corn.    Now that corn is in the $5.00 range, and natural gas, for those who use it, is currently above $9 per million BTU from $4.50 per in 2003.  (Wellhead price currently averages $8.06/MMBtu.) 

That is a huge increase of inputs.  The sales of Ethanol and DDGs has covered it because they both trend other commodities (gasoline and corn respectively).  Current futures prices traded at the CBOT show $2.55 per gal. for ethanol.  That is well below what is actually being sold.  For example, IL is at $2.578 according to DTN.   In the spreadsheet, that along with DDGs prices still creates a positive balance.  

 So is there a need for subsidies?   My feeling is no.   However if you take away those producer subsidies, future investment in the industry will be quashed.  But that was the original reason Carter signed into law those subsidies in 1978 (Energy Tax Act of 1978).  Fuel Blenders tax credits appeared in the Windfall Profits Tax Act of 1980.  The Energy Security Act of 1980 added a goal of increased Ethanol production, and $1 billion in loan guarantees.   Before someone screams ADM, let me remind you that of the large producers, ADM did not have near the capacity it has today.  They purchased corn processors such as Clinton Corn Products, and others which eventually added that capacity.  This happened well after 1980.  Sorry folks, nice try. 

In closing, if the producer subsidies went away, ethanol would survive if oil would remain above $60 bbl. 

I never drink water. I'm afraid it will become habit-forming.
W. C. Fields
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Posted by zugmann on Saturday, April 19, 2008 3:22 PM
Just remember - this is America. Just because something is sound scientifically and economically, does not mean it will get done.

Ethanol has that sort of pizazz (the farmer growing our fuel) which helped it to materialize. Show is important.

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any

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Posted by Anonymous on Saturday, April 19, 2008 3:12 PM

 zugmann wrote:
You can examine all the alternative fuel ideas you want, they all look good on paper.

Do they?  I submit that many of the alternative fuel ideas look good on paper in terms of the scientific outcome, but not in terms of economics.  If they looked good in terms of both science and economics, they will be materialized as a solution to the problem.  I don't think there is any reluctance or shortage of investment at all to materialize a good alternative.  If it is economical, there would be a huge reward for the pioneers.

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Posted by Convicted One on Saturday, April 19, 2008 2:58 PM

 zugmann wrote:
Look at how many people had to rush out and buy a new chevy truck because they re-uglified the front end.

 

LOL, point well made.

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