Unless we have alternative proven method - Corn is major

prasadbbabu · Telugu Puli Joined: 25 Dec 2006 Posts: 652

Unless we have alternative method, Corn is the major source for Ethanol production. In some Countries, Soyabean land id being replaced with corn fields to produce ethanol:

http://www.bloggingstocks.com/2007/02/01/ethanol-will-it-drive-up-soybean-prices-too/

February 01, 2007: 02:35 PM

Ethanol: will it drive up soybean prices, too?
Posted Feb 1st 2007 1:41PM by Tom Barlow
Filed under: Products and services, Insiders, Industry, Tyson Foods'A' (TSN)
As I watched the enthusiasm for ethanol grow in the wake of the President's State of the Union address, I found myself wondering what the impact of his support would mean to not just the corn consumers, but also companies that depend on soybeans. Why? Because Matthew Roberts of the Ohio State University, an expert on energy and agricultural commodity markets, anticipates between five and seven million acres of U.S. cropland will be planted in corn instead of soybeans in 2007. According to the American Soybean Council, In 2004, 75.2 million acres were planted in beans.

I spoke to Roberts today about the ramifications of this shift. He explained that, although soybeans are currently selling at about 40% over their ten-year average, this can't match the 88-90% premium corn now enjoys. Hence, the shift.

However, the prospect for soybean consumers is not dire, because he tells me we currently have the largest worldwide surplus of soybeans in history. Part of this surplus is in fact attributable to ethanol. When making ethanol, the material left after the ethanol is extracted can be used as livestock feed, replacing more expensive ground soybean feed. The more ethanol, the less need for soybeans.

Growing corn out of the normal field rotation of corn and beans does come at a cost, according to Roberts, as more fertilizer and other inputs will be required. At $4+ a bushel corn, though, farmers are willing to pay that price.

He also notes that, as the ethanol movement accelerates, several groups are beginning to raise serious questions, including the oil industry, those who raise livestock (concerned about feed costs), and anti-poverty groups (concerned about food prices).

The bottom line? Supplies of soybeans are currently abundant enough that this shift should not put pressure on the cost of the product. This is good news for major users of products dependent on soybean feed, such as eggs, chicken, and pork, as well as soybean oil and meal. No reason to dump your Tyson Foods, Inc. (NYSE:TSN) stocks because of soybeans.

ved · Telugu Veera Joined: 26 Feb 2006 Posts: 2029

On the other hand, the energy expended in making ethanol exceeds the value of ethanol generated. Besides, the corn production is heavily subsidized by US govt skewing the net cost of producing ethanol. Unless some country has abundant hydro electric capacity and wants to convert that into ethanol for more automobile usage or for future usage, large scale production of ethanol from corn is not viable.