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| Ethanol. It seems everywhere I look these past few days, there is an increased flood of negative comments about ethanol & coming from folks who have not studied the facts.
All grain producers should be pressuring the various associations to get ahead of the media curve. In my mind it is very simple, we are short of time, speaking in years, to address our energy demand, would we rather send dollars to the Middle East, which in some cases are used against us, or keep those dollars in our agricultural community & the calculations of cost in regard to ethanol, more emphasis needs to be addressed to the fact the byproducts are a valuable protein and energy source to produce meat.
It is time someone stands up to show some leadership.
Wheat
USDA will not have any meaningful projections for a couple more months.
Acreage does not have to increase in Canada, Australia or the EU….these crops were reduced by dry weather; after two drought years, the moisture situation in Australia has improved substantially.
The former soviet union countries are just one area planning acreage increases. While wheat production IN THE USA may only increase in the magnitude of 2.5 to 3 percent (if that!), the area OUTSIDE the USA appears headed towards a production increase above 7%, exceeding increases in world demand & potentially pushing world stocks above that of 2006/07 & is why I favor long corn vs short wheat and plan to be positioned in these trades, barring a world weather crisis, for the next 12 to 18 months.
Since, in some parts of the world, limited amounts of wheat are fed, at the current spread between feed grains and wheat, some of that demand will shift to feed grains; therefore, in my view, any further SHARP increases in the world NEW CROP wheat price, at this stage, will serve to increase the demand for feed grains. However, this is not a spread for the faint of heart. It is a swinger.
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Ethanol Curve & Wheat
