With U.S. and global supplies of grains expected to hit record-high levels in 2016, the big question on the minds of farmers is how we chew through such huge piles of corn.
The answer may be closer than you think, according to U.S. Grains Council (USGC) leaders.
Tom Sleight, USGC President and CEO, told Agriculture.com on the sidelines of the Commodity Classic that ethanol has the opportunity to save the corn market, again.
For perspective, it’s important to note that in 2005, ethanol production started ramping up, and corn prices traded slightly above $2.00 per bushel. By 2008, U.S. corn traded over $5.50 per bushels.
At the time, the Federal Reserve stated in a white paper, “The increase in corn prices is coincident with the increase in corn-based ethanol production. Early 2008 saw agricultural commodity prices rise at rates that have not been witnessed in nearly 40 years.”
Here we are in 2016, with corn prices desperately trying to stay trading with a 3 in front of them, and ethanol may make a cameo appearance in the “Save The Corn Market” movie.
The U.S. Grains Council is the group with its finger on the ethanol pulse. “The ethanol export market is the quickest way to use up these big corn supplies,” Sleight says.”
The USGC has surveyed the world on ethanol import prospects and ways to add value to U.S. corn production.
“Japan, China, India, and Mexico are tier and second-tier markets for U.S. ethanol exports,” Sleight says.
There are a lot of challenges in carrying out the same marketing strategy in those countries compared with what has worked in the U.S., namely being less dependent on foreign oil, he says.
For instance, in India, New Delhi, and China the attraction for ethanol use surrounds improving air pollution. “In those countries, you have new governments trying to make life better by making safer food and better air to breathe,” Sleight says. “Suddenly there is a dialogue that develops about how U.S. ethanol can help them reach air quality goals.”
In Japan, it’s a policy discussion on how U.S. ethanol can help reduce greenhouse gas emissions. And Mexico is making political changes to be positioned to use U.S. ethanol.
Ethanol as a savior for the corn market is not a shared belief by some analysts.