Re: Oil price drop effect on Corn

Posted by oldtanker on December 18, 2014 at 13:58:20 from (64.118.3.75):

In Reply to: Oil price drop effect on Corn posted by gtractorfan on December 18, 2014 at 13:20:24:

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Lower demand where? World wide there is a lower demand for oil but not in the US.

Lower prices at the pumps have more people driving. As far as ethanol is concerned the EPA mandate is 10% minimum. An easy example is gas demand is 10 gallons of which 1 is ethanol. Demand goes up, say 2X. So now they need 2 gallons of ethanol. That means they need 2x times the corn to make that ethanol.

Funny thing is if this, plus corn now being able to be shipped to China drives up demand for corn prices will rise again. Corn hits about 5.50 a bushel or so and everyone will plant corn again and drive the prices back down.

Then add in the EPA. They wanted to delay the 15% mandate because so many acres were taken out of CRP over the last several years due to prices. Somewhere near 33 million acres. That worries the EPA because a lot of that is highly erodible soil. Plus row crops have a higher erosion rate than the same soil in small grains or hay.

Rick

Replies:

• Re: Oil price drop effect on Corn paul 16:27:39 12/18/14 (0)

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