Friday, November 03, 2006

Corn and ethanol prices catching up with importance of oil prices

As corn futures prices pushed up to a 10-year high this week, estimates of corn production by the U.S. Department of Agriculture's market information unit, and their resulting impact on futures trading on the Chicago Board of Trade, are taking on growing importance as ethanol's role as a significant biofuel gains traction. The December contract on the CBOT hovered around $3.43 per bushel as this week came to a close, breaking the price in September 1996.

BUT, while the U.S. is projected to harvest the third largest corn crop in history and as a dozen or so ethanol plants are slated to open in 2007, ethanol prices are falling from their recent peak of $4.23 per gallon in June due to concerns about too much supply flooding the market. Just as the ethanol industry starts accelerating, the looming market correction -- dare anybody say 'bust" -- will test the resolve of farmers, vehicle manufacturers and policy makers alike to maintain a strategic focus on ethanol as a source for lessening our dependence on unreliable crude supplies and improving economic prospects throughout the Farm Belt. Stay tuned.

ethanol, ,
U.S. Department of Agriculture, corn prices,

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