http://www.zerohedge.com/news/us-corn-crop-estimate-cut-17-yields-forecast-drop-17-year-lows
Submitted by Tyler Durden on 08/10/2012 08:42 -0400
http://globaleconomicanalysis.blogspot.com/2012/08/dimwit-energy-policies-record-corn.html
US policy mandates production of ethanol for blending in gasoline. That ethanol comes mostly from corn.
Diverting corn crops to inefficient ethanol production has members of the Group of 20 leading economies – including France, India and China – concerned about the US ethanol policy.
In response, the UN urges US to cut ethanol production
The question at hand is whether the US agriculture secretary is an economic dimwit, a shill for the Obama administration, a shill for corn producers, or some combination thereof.
The US biofuel industry certainly has not reduced the price of gasoline. Tariffs on imported ethanol have kept the price of ethanol artificially high (but they did expire in December).
Fundamentally, government policies do not create jobs, they cost jobs. The best way to create jobs is for government to get the hell out of the way and let the free market work.
I do not know how much corn prices would drop if the US ended its inane biofuel policies. What I do know is government interventions and government-sponsored solutions never do any good.
Romney an Energy Pretzel
Which is worse? Being consistently wrong, or blowing so much in the wind voters haven't a clue what you stand for?
Before deciding, please consider Mitt Romney, the pretzel candidate by George Will (written October 28, 2011).
Obama, a floundering naif who thinks ATMs aggravate unemployment, is bewildered by a national tragedy of shattered dreams, decaying workforce skills and forgone wealth creation.
Romney cannot enunciate a defensible, or even decipherable, ethanol policy.
Life poses difficult choices, but not about ethanol. Government subsidizes ethanol production, imposes tariffs to protect manufacturers of it and mandates the use of it — and it injures the nation’s and the world’s economic, environmental, and social (it raises food prices) well-being.
In May, in corn-growing Iowa, Romney said, “I support” — present tense — “the subsidy of ethanol.” And: “I believe ethanol is an important part of our energy solution for this country.” But in October he told Iowans he is “a business guy,” so as president he would review this bipartisan — the last Republican president was an ethanol enthusiast — folly.
Romney said that he once favored (past tense) subsidies to get the ethanol industry “on its feet.” But Romney added, “I’ve indicated I didn’t think the subsidy had to go on forever.”
Ethanol subsidies expire in December, but “I might have looked at more of a decline over time” because of “the importance of ethanol as a domestic fuel.” Besides, “ethanol is part of national security.” However, “I don’t want to say” I will propose new subsidies. Still, ethanol has “become an important source of amplifying our energy capacity.” Anyway, ethanol should “continue to have prospects of growing its share of” transportation fuels.
US Corn Crop Estimate Cut 17% With Yields Forecast To Drop To 17 Year Lows
Corn was already surging to new record highs before the USDA released the WASDE report this morning. With a consensus view of 10.929 billion bushels (compared to USDA's prior 2012 estimates of 12.97 billion), the USDA's 10.779 billion bushel forecast means a17% slashing in harvest expectations. Crop conditions were the worst since 1988 with 69% of the Midwest in drought. Soybeans likewise were expected to show a 2.796 billion bushel production forecast (based on Bloomberg's survey) which compares with the 3.05 billion prior forecast from USDA and just came 4% below expectations. Bloomberg notes: "The U.S. drought means that global corn supplies will be critically tight for the next year; Livestock and milk-product prices will have to rise to cover the increased feed costs. Eventually, global consumers will have to pay the bill." It appears the algos were at play immediately after the report as prices surged (in corn) to $8.49 before falling rapidly back to $8.19, and are now up fractionally at $8.31. The biggest consequence is a heavier drag on any possibility of a sizable Chinese stimulus as food price inflation, as we noted last night, is set tostymie any flood of money. Wheat is down, Corn up a little, Soy up more.
Via USDA:
and.......U.S. feed grain supplies for 2012/13 are projected sharply lower again this month with corn production forecast 2.2 billion bushels lower and sorghum production forecast 92 million bushels lower. The forecast U.S. corn yield is reduced 22.6 bushels per acre to 123.4 bushels as extreme heat and dryness continued, and in many areas worsened, during July across the Plains and Corn Belt. As forecast, the 2012/13 corn yield would be the lowest since 1995/96."U.S. corn production for 2012/13 is forecast at 10.8 billion bushels, the lowest since 2006/07. Relatively small increases in carryin and imports only partly offset this month’s substantial reduction in crop size. Ending stocks for 2011/12 are projected 118 million bushels higher with lower expected exports, reduced corn use for ethanol, and a small increase in imports. Imports for 2012/13 are also raised, up 45 million bushels to 75 million, reflecting strong domestic corn prices and competitively priced foreign supplies. Total U.S. corn supplies for 2012/13 are projected down 2.0 billion bushels and at a 9-year low.This month’s large reduction in U.S. corn supplies and the sharply higher price outlook are expected to further reduce 2012/13 corn usage. Total use is projected 1.5 billion bushels lower and at 11.2 billion would be a 6-year low. The biggest reduction again this month is for feed and residual disappearance, projected down 725 million bushels. Food, seed, and industrial (FSI) use is also projected lower, down 470 million bushels, mostly reflecting a 400-million-bushel reduction in corn used to produce ethanol. Reductions in other food and industrial uses account for the remainder of the FSI decline. Ending stocks for 2012/13 are projected at 650 million bushels, 533 million lower and the smallest carryout since 1995/96. The 2012/13 season-average farm price for corn is projected at a record $7.50 to $8.90 per bushel, up sharply from the $5.40 to $6.40 per bushel projected in July. Projected farm prices for the other feed grains are also raised.The 2012/13 season-average farm price for corn is projected at a record $7.50 to $8.90 per bushel, up sharply from the $5.40 to $6.40 per bushel projected in July.Perhaps even more importantly, Soybean looks set to make new records, which means no mas from PBOC:Soybean
production for 2012/13 is projected at 2.7 billion bushels, down 358
million due to lower harvested area and yields.Harvested area is
projected at 74.6 million acres, down 0.7 million from the July
projection. The first survey-based soybean yield forecast of 36.1
bushels per acre is 4.4 bushels below last month’s projection and 5.4
bushels below last year’s yield. Soybean supplies for 2012/13 are
projected 12 percent below last month to a 9-year low on lower
production and reduced beginning stocks. Soybean exports are reduced 260
million bushels to 1.11 billion bushels. Soybean crush is also reduced
as higher prices reduce domestic use and prospective exports for both
soybean meal and oil. Soybean ending stocks are projected at 115 million
bushels, down 15 million.U.S. changes for 2011/12 include increased soybean crush and
exports and reduced ending stocks. Crush is increased 15 million bushels
to 1.69 billion reflecting increased exports and domestic use of
soybean meal. Soybean exports are increased 10 million to 1.35 billion
bushels reflecting strong shipments in recent weeks. Soybean ending
stocks are projected at 145 million bushels, down 25 million.Soybean and product prices for 2012/13 are all raised to record
levels this month, reflecting the impact of sharply reduced soybean and
corn production. The U.S. season-average soybean price is projected at
$15.00 to $17.00 per bushel, up $2.00 on both ends. Soybean meal prices
are projected at $460 to $490 per short ton compared with $365 to $395
last month. Soybean oil prices are projected at 53 to 57 cents per pound, up 0.5 cents on both ends.
http://globaleconomicanalysis.blogspot.com/2012/08/dimwit-energy-policies-record-corn.html
Friday, August 10, 2012 2:04 PM
Dimwit Energy Policies, Record Corn Prices, and UN Pleas for US to Change Ethanol Policy; Obama Consistently Wrong, Romney an Energy Pretzel
The price of corn is at all all-time high because of extreme drought conditions in the US coupled with the hottest July temperatures since records began 117 years ago.
Inane Policies
Inane Policies
US policy mandates production of ethanol for blending in gasoline. That ethanol comes mostly from corn.
Diverting corn crops to inefficient ethanol production has members of the Group of 20 leading economies – including France, India and China – concerned about the US ethanol policy.
In response, the UN urges US to cut ethanol production
The US is poised to divert around 40 per cent of its corn into ethanol because of the Congress-enacted mandate despite “huge damage” to the crop because of the worst drought in at least half a century, José Graziano da Silva, director-general of the UN’s Food and Agriculture Organisation, warned.Economic Dimwit or Shill?
“An immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channelled towards food and feed uses,” he wrote in an opinion piece in the Financial Times.
Tom Vilsack, US agriculture secretary, raised doubts about the impact of waiving the ethanol mandate, arguing that the US biofuel industry had reduced petrol prices and created jobs.
The question at hand is whether the US agriculture secretary is an economic dimwit, a shill for the Obama administration, a shill for corn producers, or some combination thereof.
The US biofuel industry certainly has not reduced the price of gasoline. Tariffs on imported ethanol have kept the price of ethanol artificially high (but they did expire in December).
Fundamentally, government policies do not create jobs, they cost jobs. The best way to create jobs is for government to get the hell out of the way and let the free market work.
I do not know how much corn prices would drop if the US ended its inane biofuel policies. What I do know is government interventions and government-sponsored solutions never do any good.
Romney an Energy Pretzel
Which is worse? Being consistently wrong, or blowing so much in the wind voters haven't a clue what you stand for?
Before deciding, please consider Mitt Romney, the pretzel candidate by George Will (written October 28, 2011).
Obama, a floundering naif who thinks ATMs aggravate unemployment, is bewildered by a national tragedy of shattered dreams, decaying workforce skills and forgone wealth creation.
Romney cannot enunciate a defensible, or even decipherable, ethanol policy.
Life poses difficult choices, but not about ethanol. Government subsidizes ethanol production, imposes tariffs to protect manufacturers of it and mandates the use of it — and it injures the nation’s and the world’s economic, environmental, and social (it raises food prices) well-being.
In May, in corn-growing Iowa, Romney said, “I support” — present tense — “the subsidy of ethanol.” And: “I believe ethanol is an important part of our energy solution for this country.” But in October he told Iowans he is “a business guy,” so as president he would review this bipartisan — the last Republican president was an ethanol enthusiast — folly.
Romney said that he once favored (past tense) subsidies to get the ethanol industry “on its feet.” But Romney added, “I’ve indicated I didn’t think the subsidy had to go on forever.”
Ethanol subsidies expire in December, but “I might have looked at more of a decline over time” because of “the importance of ethanol as a domestic fuel.” Besides, “ethanol is part of national security.” However, “I don’t want to say” I will propose new subsidies. Still, ethanol has “become an important source of amplifying our energy capacity.” Anyway, ethanol should “continue to have prospects of growing its share of” transportation fuels.
Got it?If anyone truly knows where Romney stands on ethanol, please tell me. Better yet, please tell Romney.
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