In Friday's Star Tribune, Adam Belz reported in Corn prices keep slumping, and farmers keep planting more:
Corn farmers are throwing another government-backed Hail Mary this year, planting more of the crop than in 2019 even though prices are near the bottom of a six-year slump.
“They call it plant and pray,” said Al Kluis, a commodities broker in Wayzata. “What you want is a disaster in some other part of the Corn Belt or some other country.”
Favorable weather in April helped most Minnesota farmers get corn in the ground faster than last year, when a wet spring kept them out of some fields until June and some cornfields were never planted.
But despite all those problems, the 2019 crop yielded the sixth-largest harvest of all time. The U.S. Department of Agriculture now projects a record corn harvest in 2020. . . .
Farmers came into the spring with a large inventory of corn in storage, and demand for the commodity has been hit on multiple fronts since the onset of coronavirus.
Ethanol plants have shuttered due to decisions by the Trump administration to exempt oil companies from ethanol standards and, more recently, the cratered demand for all types of fuel caused by the coronavirus pandemic. Ethanol production is running about 70% of capacity, Kluis said.
Meanwhile, the shutdown of restaurants and idling of meatpacking plants that have led to farmers euthanizing chickens and hogs means the need for corn to feed livestock will probably drop about 20%.
Write your own dark humor punchline about the marketplace.
The Fencepost posted Grassley, Klobuchar introduce biofuels bill on Friday from the Hagstrom Report:
Sens. Chuck Grassley, R-Iowa, and Amy Klobuchar, D-Minn., introduced a bill to require the Agriculture Department to reimburse biofuel producers for their feedstock purchases from Jan. 1 through March 31 through the Commodity Credit Corporation.
“The biofuels industry works directly with our farmers. And the current disruptions from the pandemic have created ripple effects, including steep declines in corn and soybean prices,” Grassley said.
“We need to continue to support those farmers who feed and fuel our country and the world. This bill will help ensure biofuel producers survive this economic downturn and also ensure corn and soybean farmers have a place to sell their products.”
“At a time when many farmers and rural communities are feeling disproportionate impacts from the coronavirus pandemic, it’s important we work to keep our renewable fuel industry strong,” Klobuchar said.“Renewable fuel processing plants employ thousands of people in rural areas, purchase billions of bushels of commodities from farmers, and provide stability in our agricultural supply chain. This legislation will ensure farmers and workers receive our support during these tough times.”
Growth Energy CEO Emily Skor praised the bill, saying, “After the devastation created by COVID-19, it’s vital that Congress and the U.S. Department of Agriculture ensure that biofuel plants stand ready to restore production and reopen markets for America’s farmers. Unless Washington acts, we’ll be trying to rebuild the rural economy with one arm tied behind our back.”
“The COVID-19 pandemic has had devastating effects on the U.S. ethanol industry,” RFA President and CEO Geoff Cooper said.
“Tens of thousands of good jobs in rural communities are in jeopardy as fuel demand has plummeted and scores of ethanol plants have been forced to shut down. Fortunately, Sens. Grassley and Klobuchar are watching out for the 350,000 men and women whose jobs are supported by the ethanol industry. The legislation they introduced today would lend a vital helping hand and assist renewable fuel producers as they attempt to get back on their feet.”
American Coalition for Ethanol CEO Brian Jennings added, “We need direct assistance to help the U.S. biofuel industry survive this catastrophic downturn, and their legislation would do that.”
News Dakota reported Friday in U.S. Ethanol Heading to China:
According to three ethanol-industry sources and shipping data, a rare U.S. ethanol shipment will arrive in China very soon. Reuters says that may be the first ethanol shipment to hit China since the two countries struck a trade deal earlier this year. China recently waived some additional tariffs on almost 700 American products, including ethanol, to support more purchases of U.S. farm goods to help meet its obligations in the Phase One trade deal. Since China made the move, the ethanol industry has been watching for signs of renewed trade in the biofuel. Tariffs on U.S. fuel ethanol were as high as 70 percent after Beijing upped some retaliatory tariffs on U.S. imports in the back-and-forth trade dispute with Washington, D.C. A slump in fuel demand brought on by COVID-19 led to an oversupply of ethanol that caused prices to bottom out, forcing producers to slash their production amounts. One of the three sources to tell Reuters about the shipment says the vessel was carrying ethanol that originated in the United States and had been resold to China, likely from a seller in Saudi Arabia. A trader based in China tells Reuters that, “People are looking to import fuel ethanol from overseas as prices in northeastern China have risen in the past few days.”
Draw your own conclusion.
On Friday, Progressive Farmer's Todd Neeley reported in Ethanol Shows Signs of Life Falling Stocks, Rising Fuel Demand Helps Industry:
Under normal circumstances, an improvement in ethanol margins would be celebrated in the industry. Yet the economic shutdown from COVID-19 has been far from normal.
In the past few months, oil has been cheap, gasoline has followed in response to a crash in demand and ethanol plants have been left with higher-priced product sitting in tanks, but there are signs of a slow recovery for the ethanol industry.
"A good sign that ethanol plants are ramping up production can be seen in the additional offers seen in the DDG (dried distillers grains) market," DTN Cash Grains Analyst Mary Kennedy said.
"Prices have returned to pre-COVID-19 levels, and in some cases, are weaker. Cash corn prices for the week have seen support from a slight improvement in basis as plants begin to seek out old-crop corn supplies. While ethanol plant corn demand may be slowly picking up, most farmers are not in the selling mood right now."
According to industry estimates, about 140 of the more than 204 ethanol plants across the country have either idled or cut back production during the COVID-19 crisis.
"We're starting to see things become more stable as demand comes back," Eric Mosbey, general manager at Lincolnland Agri-Energy, LLC, in Palestine, Illinois, said during a University of Illinois farmdoc webinar this week.
"We're starting to see customers increase their orders."
Weekly gasoline demand hit a low of 5.07 million barrels per day (bpd) in April, according to data from the U.S. Energy Information Administration. The latest numbers show weekly demand at 7.4 million bpd so far in May. Prior to the economic shutdown, demand peaked at 9.7 million bpd.
Elsewhere in Progressive Farmer, Mary Kennedy reported Friday in the Market Matters blog article, DTN Weekly Average DDG Price Lower:
Of the 40 locations DTN contacted that showed offers for domestic distillers dried grains (DDG) for the week ended May 21, posted offers averaged $143 per ton, down $5 versus the prior week. The cash corn price has not improved much on average since one week ago and basis has seen a slight improvement, but nothing earth shattering. The cheaper DDG prices are beginning to entice some feeders to return to DDG usage, but demand right now is still weak.
Based on the average of prices collected by DTN, the value of DDG relative to corn for the week ended May 21 was 126.01%. The value of DDG relative to soybean meal was 50.62%. The cost per unit of protein for DDG was $5.30, compared to the cost per unit of protein for soybean meal at $5.95.
Biofuels International (not as subversive as that last word makes it seem) reports in US Grains Council: ‘The reality is the physical movement of grain, feed and ethanol hasn’t fundamentally changed’:
The US grain trade has continued supplying countries with much-needed commodities during the COVID-19 pandemic.
As many parts of the world are on the verge of reopening, the US Grains Council president and CEO Ryan LeGrand sat down with the National Association of Farm Broadcasting to discuss how the movement of grain has continued.
He explained trains are continuing to move north to Canada and south to Mexico; barge facilities are operating throughout the inland waterway system; and vessels are loading and shipping US products to destinations around the world.
He did note shortages in container availability, but emphasised grain is moving, and the US is open for business.
He said: “The reality is the physical movement of grain, feed and ethanol hasn't fundamentally changed."
Well, thank goodness for those over-producing farmers. Bridget Kranz profiles one in the Owatonna Peoples Press article, Blooming Prairie farmer plays international role in the corn industry:
Jim O’Connor may grow his corn on a 150-year-old family farm in Blooming Prairie, but his work as an advocate in the ag industry spans nearly half the globe.
Recently re-elected to the Minnesota Corn Research & Promotion Council, O’Connor and his peers help fund exploration into efficiency, sustainability and new markets for the state’s corn growers. Heading into his second three-year term on the board, O’Connor said he is especially passionate about expanding ethanol infrastructure and discovering new uses for his product such as plastic, alternative fibers and — especially relevant today — hand sanitizer.
That plastic could be a bummer for North Dakota, which has been touted as the next plastics production Oz in 2019 articles like As the Bakken booms, North Dakota eyes plastics and Sanford: Western North Dakota most likely home for plastics plant.
Bioplastics are touted as more environmentally friendly than those produced with petroleum products, but there's some debate about that, Renee Cho reported in The truth about bioplastics.
We'll add to this news of the uncertainty as we discover more ethanol news.
Image: from the MN Ag in the Classroom Corn in Minnesota and Fun Facts page. Among the fun facts: "Minnesota is a major grower of corn. We are 1st in the U.S. for growing sweet corn and 4th for growing field corn."
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