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Increasing demand for corn

Agriculture.com Staff 03/12/2009 @ 2:45pm

How long has it been since market participants have been able to discuss increasing demand? This week's back-and-forth regarding increasing the ethanol blend actually has analysts increasing corn demand!

Of course, the sticking point could be the 270 day comment period at the EPA. Plus with so much on the new administration's plate these days, is there the political muscle to push this through? Right now, there is somewhat of a backlash against anything that is not associated with "fixing" the financial system. The proposal had better have more than the ethanol industry and Secretary of Ag Vilsack supporting it.

For the ethanol industry, the blending wall is definitely a problem. Gasoline demand has declined enough that current ethanol production (even with the well-advertised plant shutdowns) is just about at the current Renewable Fuels Standard. Increasing the blended volume is the easiest fix that allows ethanol growth to continue.

As it gets closer to planting time in the Midwest, the discussion about acres continues to bubble. Look for updated numbers from Informa Economics tomorrow morning. This is the firm that has consistently forecast a small number of corn acres. If the trend continues, the corn market will have to decide whether to make a last ditch rally effort in an attempt to gain acres.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

How long has it been since market participants have been able to discuss increasing demand? This week's back-and-forth regarding increasing the ethanol blend actually has analysts increasing corn demand!

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