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Corn - The Low Cost Energy

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  • Cornstoves
    Corn heat cost less than any other energy even in year 2007 at the all time historical peak for corn prices. The previous corn price peak was $3.55/bu in the
    Message 1 of 1 , Feb 12, 2007
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      Corn heat cost less than any other energy even in year 2007 at the
      all time historical peak for corn prices. The previous corn price
      peak was $3.55/bu in the late 1970's. Expect Corn prices or corn
      futures to be synthetically high during planting season to encourage
      corn acreage to double in 2007. If corn acreage doubles as projected
      in 2007 can anyone guess the price for corn in the fall of 2007? I
      highly recommend paying the local corn farm the existing price even
      when (not if) corn prices tank. Keep that local corn farm in
      business for 2008 and beyond.

      Following insane profits, note below that "Big Oil" is holding dyno
      petroleum prices below the peak but above previous averages. The
      price of corn futures is up during the corn planting season. As
      intended, Ethanol refineries are loosing value. When approved
      ethanol plants disappear, corn prices will tank and the price of dyno
      petroleum will once again sky rocket. It is not legal to run
      Tennessee corn ethanol moonshine at home without paying road tax and
      dilution to prevent consumption with 10% dyno petroleum.

      The Ratchet Affect - Big oil constantly rachets the price of fuel
      continuously up and slightly down. Ratchet oil prices up to make
      insane profits and slightly back down to drive out competition, keep
      the big government "exploration" grants and government tax protection
      coming.

      No heat energy cost less than corn at $6/bushel including free cut-
      your-own wood or pick-it-up-off-the-ground coal, if you haul and pay
      road tax.

      Reprinted with credit and permission:

      Ethanol: a smidgen of caution
      Feb 12, 2007 10:04 AM, By Hembree Brandon
      Farm Press Editorial Staff

      Farmers who heretofore have had to look at energy prices as a cost of
      doing business are now evaluating them in relation to crop plans and
      potential investment.

      BRANDON
      Corn, which has always been basically a food/feed commodity, with
      some corollary industrial uses, is now the primary ingredient for the
      burgeoning U.S. ethanol industry. And now that farmers are producing
      corn both for traditional uses and for energy, they're finding that
      the commodity market volatility they've always had to contend with
      now includes the volatility of the energy market.

      Corn prices, which have reached all-time highs, and have had even the
      straight-laced Wall Street Journal pondering the impact on the price
      of corn flakes breakfast cereal, are likely to spur farmers to make
      major acreage switches this year in order to capitalize on the
      situation.

      At the same time, everybody and his dog is jumping on the ethanol
      bandwagon — plants are springing up everywhere and dozens more are on
      the drawing board. Many are majority farmer-owned; many have so far
      made good money for their investors (thanks in part to a subsidy and
      tax exemption amounting to almost half the per-gallon price). Some
      investor groups have had purchase offers for their plants that would
      return millions over their original stake.

      At the other pole, one biofuels company which includes a bigtime
      entertainer and a well-known movie star as major stockholders, has
      seen its stock plummet from a high of more than $7 a year ago to 55
      cents this week.

      As any experienced farmer knows, markets (and investments) are
      nothing if not changeable. Many remember the heady days of $12
      soybean futures. Some, alas, also remember holding out for $15 and
      the gloom that followed as prices dropped like a rock.

      Corn futures, which have zoomed from below $2 at the end of 2005 to
      more than $4 in January, have farmers salivating over crop prospects
      and for the ethanol that has driven the price run-up.

      But the ethanol industry is less than ecstatic over now having to pay
      almost twice as much for its corn feedstock, particularly when the
      price of gasoline (and ethanol) has been falling.

      Some analysts say long-term corn above $4 and ethanol at $2 or below
      could force many ethanol plants out of business. A significant drop
      in ethanol demand/prices would send corn prices into a nosedive. (We
      won't even speculate on the ability of Big Oil to easily put a major
      price/profitability squeeze on ethanol, or on what would happen if
      tariffs on imports were lifted and cheap ethanol from Brazil and
      elsewhere flowed into the United States.)

      The rosy picture President Bush painted for biofuels in his State of
      the Union address only heightened the interest in ethanol and
      alternative fuels, despite a glaring lack of any plan for an
      infrastructure to support that kind of production and usage.

      Until there is a major commitment to that infrastructure, either by
      government or industry or both, the promise of alternative fuels will
      continue to flounder.

      e-mail: hbrandon@...
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