Archive for June, 2008

Agro Industry Suffers Severe Irony Event

Monday, June 30th, 2008

By David L. Brown

I have to chuckle, except that it isn’t funny at all. I receive a magazine called AgriMarketing that covers the agro-products industry. I featured the magazine’s cover a few months ago when it named Ethanol as the Product of the Year for 2007. Yes, just a few months ago the ag industry was gloating about the wonderful windfall that was occurring, benefiting farmers and suppliers alike, thanks to the emergence of a vast conspiracy to turn food into fake fuel. At the time I lambasted the whole thing as an outrageous crime against humanity. (You can read my diatribe by searching for the article “Ethanol Praised as Food Stocks Fall, Prices Rise,” posted here December 15, 2007.)

So why am I chuckling today? Well, here is the cover of the current issue of AgriMarketing. I think that you, too, will get the joke.

agmket.jpg

So what is the problem with the livestock industry? Umm, well, it seems that with corn selling at upwards of $7 a bushel, and soybeans at over $15, dairymen, cattle feeders, hog farmers, and poultrymen are losing their shirts — all at least in large part due to the “success” of the ethanol scam. Feed and other costs are eating them alive, and as consumer prices for their products rise, demand will surely fall.

I can testify to that last point by a personal anecdote. A few days ago I was shopping at the nearby Albertson’s super market and noticed the butcher putting out some freshly cut meat. Stopping, I asked him if he had any good deals on lamb.

“Oh, I can cut you some nice loin chops,” he said with a smile.

“Yeah, but what’s the price?” I asked. He took a look and turned back to me with a surprised expression on his face. The chops were priced at $14.99 a pound. I put up my hands palms out as if to ward off a vampire, as he wistfully remarked, “You know, I can remember when you could buy a whole lamb for fifteen dollars!”

Needless to say, that night we ate chicken, not lamb. And, oh yes, before going home I stopped to fill my gas tank with 87 octane regular for just under $4 a gallon at the local Shell station.

There in a nutshell is what is wrong with the livestock industry, what it needs saving from, and in all fairness it is not entirely the fault of ethanol, but that might have been the final straw that pushed things over the brink. It is extremely ironic that the same magazine that was recently touting the wonders of ethanol is now tolling the bell of despair over the gloomy state of the livestock industry. (more…)

No More Gushers — Post Peak Oil is Here

Friday, June 27th, 2008

By David L. Brown

I wrote here a few days ago that when oil breaks the $140 barrier there will be no stopping it from going to $150. Well, it’s happened, as Reuters reports this morning:

LONDON (Reuters) – Oil leapt to a new record high above $142 a barrel on Friday, extending gains after surging nearly 4 percent in the previous session, as tumbling global stock markets helped to trigger a wider commodities rally.

U.S. light crude for August delivery was $1.70 up at $141.34 a barrel by 8:12 a.m. EDT, off a record high of $142.26.

London Brent crude was $1.39 up at $141.22, off a record high of $142.13.

Oil prices are on the march again, despite Saudi promises of increased production. The problem is that pesky old Oil Peak, the fact that the world has reached or is reaching the maximum sustainable level of production. Supply has grown and grown along with the world’s population and in particular the trend of so-called “emerging economies” to aspire to First World standards of living. That most notably includes China and India, both enormous nations with over a billion people each. But now it can no longer grow, even though the United Nations blithely reported a couple of days ago that energy supplies would increase by another 50 percent by 2020. Sorry, UN, but if you are planning on that increase coming from petroleum, it ain’t gonna happen.

There is a lot of misunderstanding about what it means to be reaching Peak Oil. A common idea is that it means “we are running out of oil.” That is completely false, and in fact we have been in the last couple of years producing more oil than ever before in history. There is still oil in the ground, and there will be for a long time to come. The problem is that demand has continued to grow and supply can no longer keep up. It is only through heroic efforts that production has even been able to remain at near the peak, methods such as priming declining oil fields with injections of water, using billion dollar offshore oil rigs to suck oil from far beneath the ocean bed, and making low quality crude from oil sands (tar-like bitumen) and perhaps even in the near future oil shale.

This not business as usual, but desperate efforts to keep the oil pipelines flowing. As witnessed by the ever-rising prices there is not enough oil being produced to satisfy demand. No matter how much Peak Oil deniers would like to think that this is a temporary blip and that things will soon turn back to “normal,” it is not going to happen because events are taking place in perfect harmony with the laws of supply and demand. At present oil prices, if any oil producer anywhere on Earth had extra capacity, don’t you think they would be rushing to sell it while the gettin’s good? Before the prices drop again? Yes, they would, for that is the nature of another natural law, the law of human greed, the behavior patterns of Homo Economicus or Economic Man.

Let’s face it: this is “normal,” the new normal, the one we are going to have to accept and live with.

As I mentioned above, there is still plenty of oil left in the ground, although much of it is of low quality and difficult to extract and process. In fact, about one-half of the estimated total oil that was in the ground before the Age of Oil is still there. The problem is that the one-half that has already been pumped out and used, about one trillion barrels, was the best quality and the easiest to pump. Light and easy-to-refine oil once poured out of the ground in places such as Texas and Saudi Arabia. Remember the old movies portraying gushers, with oil literally erupting out of the ground? Those were the good old days, ushered in by the enormous gusher that spewed from the historic Spindletop well in 1901.

Those days are no more. Today’s oil production is much more expensive, more problematic, and as often as not takes place in far away and unstable places. As an example, Nigeria’s oil fields are under constant low-level threat from terrorists. A Royal Dutch Shell offshore facility was recently attacked by armed militants who had the goal of destroying the control center for the complex, which produces 200,000 barrels a day. Just yesterday Saudi Arabia announced that over the past six months it has detained more than 700 terrorists plotting to disrupt the Kingdom’s oil infrastructure. How many more are lurking, planning, and will at some point succeed?

(more…)

Evidence Mounts for Climate Tipping Points

Monday, June 23rd, 2008

By David L. Brown

We have written much here about the possibility of the global climate reaching tipping points, the result of feedback effects that might culminate in sudden and dramatic changes in temperature, weather patterns, rainfall, and other factors. Many climate experts have been warning that such events are not only possible, but likely. The idea was presented (albeit in an exaggerated and unlikely way) in the stupid movie “The Day After Tomorrow,” in which a reversal of the Atlantic thermohaline conveyor was supposed to put the eastern U.S. into an instant deep freeze.

Well, now there is evidence that extreme climate change can take place suddenly and irreversibly, perhaps in a single year. The evidence comes from new ice cores being studied from the Greenland Ice Sheet, where year-by-year snowfall layers provide a picture of the past. The story is reported on the Scientific American web site here. Here is the lede from the story:

Roughly 14,700 years ago the weather patterns that bring snow to Greenland shifted from one year to the next—a pattern of abrupt change that was repeated 12,900 years ago and 11,700 years ago when the earth’s climate became the one enjoyed today—according to records preserved in an ice core taken from the northern island. These speedy changes—transitions from warming to cooling and back again—in the absence of changes in greenhouse gas could presage abrupt, catastrophic climate change in our future.

According to the article, the abrupt changes were caused by shifts in air circulation, “and these changes took place from one year to the next more or less,” says glaciologist Sune Olander Rasmussen of the Centre for Ice and Climate at the University of Copenhagen, one of the researchers.

This is ominous news for it indicates the possibility of a catastrophic climate event that could take place with little or no warning, and leaving no time for human civilization to adapt. Unfortunately, even the most sophisticated climate models cannot predict such events; they defy definition because they represent sharp breaks with former trends.

Here is another passage from the Scientific American article, offering more evidence that the Greenland Ice Sheet may be far less stable than has been thought:

Greenland can change quickly, even living up to its name, according to another paper in this week’s Science. Sediment cores from the ocean show that forests of spruce and even fern grew on Greenland just 125,000 years ago. That means Greenland’s ice sheet—potentially responsible for as much as 75 feet (23 meters) of sea-level rise if it all melts—has grown and shrunk far more frequently than previously known.

NASA climate expert James Hansen has recently renewed warnings of possible tipping points in an article published in the 2008-9 State of the Wild, an annual publication of the Wildlife Conservation Society. The article is titled “Tipping Point, Perspective of a Climatologist.” Here is a key quote from Hansen’s article:

Our home planet is dangerously near a tipping point at which human-made greenhouse gases reach a level where major climate changes can proceed mostly under their own momentum. Warming will shift climatic zones by intensifying the hydrologic cycle, affecting freshwater availability and human health. We will see repeated coastal tragedies associated with storms and continuously rising sea levels. The implications are profound, and the only resolution is for humans to move to a fundamentally different energy pathway within a decade. Otherwise, it will be too late for one-third of the world’s animal and plant species and millions of the most vulnerable members of our own species.

Umm, ominous words indeed. And the latest report from the Greenland ice cores supports Hansen’s thesis that sudden tipping points are possible. As we have documented here, the melting of the Arctic sea ice is progressing with ever increasing speed. Only about three years ago scientists believed it would be 100 years before the last of the polar ice would be gone. Within a year they dropped their prediction to 30 years, and now some believe it could happen by 2015. Last summer saw the ice melting like a popsicle in July. The melting is likely to accelerate even faster, as demonstrated in this chart from NASA that illustrates what is happening in the Far North:

217299main_nsidc_fig2_iceage_500.jpg

The diagram indicates the age of the ice, as observed between 1985-2000 and as of February this year at right. Note the widespread amount of “new,” one year old ice that was present in February, and how much of the older ice has disappeared. Obviously, new ice is far more susceptible to melting in the Summer heat, so one might conclude that the red areas will become open water this Summer. Other data I recently saw indicated that the thickness of the Arctic sea ice has declined precipitously, and it is becoming more and more obvious that the Arctic Ocean will be essentially ice free in the fairly near future. Snow and ice reflects solar heat back into space, but open water absorbs and stores the heat. The long Arctic summers with 24 hour sunlight will allow the ocean waters to soak up vast amounts of solar radiation, growing warmer and warmer like a saucepan on slow simmer.

As Hansen warns, that is exactly the kind of powerful feedback effect that can cause tipping points to be reached, and something like that could cause drastic changes in the world’s climate, perhaps not quite as sudden or dramatic as the unlikely events portrayed in the stupid movie “The Day After Tomorrow,” but serious enough to threaten the very continuation of civilization.

Meanwhile climate change deniers continue to be convinced that there is no such thing as global warming, or if there is that it will be a good thing because they won’t have to shovel snow from their driveway. Consider that the climate change observed in the Greenland ice cores amounted to as much as 20 degrees F. of warming, all in the space of only about one year. Now something like that would be real cause for concern, and it could happen almost any time, on a planet near you.

Say Hello to Five Dollar Gasoline

Thursday, June 19th, 2008

By David L. Brown

Here is an image from California to help put the effects of the Oil Peak into perspective.

1_61_gas320.jpg

Remember way back when, in those distant days of yore when we were talking about the possibility of four dollar gasoline? When diesel fuel was already sitting at $3.999? Hmm, seems like just yesterday doesn’t it? Ooops, it was just yesterday, or at least only three or four weeks ago.

The photo is from a FoxNews report this morning that describes how sales of super 93 octane gasoline have plummeted as motorists choose to burn the cheapest grade of regular. It is no wonder, with the difference at as much as forty cents a gallon as was the case at this Chevron station.

And imagine that you are an over-the-road trucker, an owner-operator contract driver like so many who have been enticed into becoming entrepreneurs so that the trucking companies don’t have to be responsible for anything. A big rig typically takes 300 gallons for a fill-up, and at the price shown above that would cost $1619.70 for a full tank. That would give the truck a range of about 1600 miles, so the fuel cost alone would be a dollar a mile. We reported recently that 1000 U.S. trucking companies have gone out of business just since the first of the year.

And what about those tens of thousands of individual owner-operators? I have to think a whole lot of them are parking their rigs and thinking hard about the future. Really hard. So what does that mean for us? How we gonna get all our “stuff” if the trucks can’t afford to run? Bummer!

Meanwhile, this news today: Shell Oil has shut down the Bonga oil field in Nigeria that produces about 200,000 barrels per day after a guerrilla group attacked it and attempted to destroy the computer control center. Strangely enough, that 200,000 barrels is exactly the amount by which the Saudis pledged to increase their oil output, as we reported here just three days ago. That move was touted by the UN’s Ban Ki-Moon as having the ability to “deflate” oil prices. Hmm, no sign of deflation yet, and that single event in Nigeria negates the Saudi contribution.

Meanwhile, the Rabbit of Unreasonable Hope has been conjured out of its top hat again today with reports that gasoline prices have declined in some areas. This is being interpreted as a sign that a continuing downward trend is in the offing. Unfortunately, I don’t see much evidence that it is anything that significant. It is true, however, that drivers are using their vehicles less, and as fuel supplies build there may be some short-term downward pressures on retail pump prices — but we have to keep our eyes on the big picture, which is the world oil supply and demand. That is where the prices are really set, not in the last stages between the refinery and the pump.

Meanwhile, keep on keeping on, and tune in for more news from the front as we spin into the unfamiliar territory of a post-Peak Oil, post-Peak People, and post-Peak Food world. Interesting times indeed.

More Wet Weather Moving Into Farm Belt?

Wednesday, June 18th, 2008

By David L. Brown

Just a brief post to alert readers to the possibility of a resumption of rainy conditions across the farm belt. This is the current radar weather map for the United States as of 9 p.m. June 18. All those green and yellow spots indicate storms and precipitation, and the lows pushing in from the West will no doubt end the few days of sunny weather that the Midwest has enjoyed.
map.jpg

If that rain that is falling now across the High Plains moves into Iowa and Missouri tomorrow and proceed into the Mississippi Valley and beyond, it could add to the troubles already faced by corn and soybean farmers. Today two more levees broke along the Mississippi River, flooding thousands of acres of cropland and causing a total loss of those fields. The prospects for the 2008 crop season are not improving, to say the least.

Chinese Get Trotters Into Trough, Root

Tuesday, June 17th, 2008

By David L. Brown

pigs_trough_1.jpg

This news just in from AgWeb.com:

China to Purchase U.S. Soybeans

Sara Muri, AgWeb Crops Online Editor

Chinese officials have pledged to purchase more than $4.5 billion worth of U.S. soybeans, equaling about 10% of U.S. soybean production, according to the United Soybean Board (USB). Representatives from 14 Chinese import companies signed contracts with eight U.S. soybean companies June 16 in St. Louis.

In addition to the various Chinese representatives, the Chinese Vice Premier, Wang Qishan, attended the ceremony.

“The Vice Premier’s visit is an honor to all U.S. soybean farmers,” said Terry Ecker, USB director in a press release. “The Chinese are our No. 1 soybean export customer. This is an exciting opportunity for U.S. soybean farmers who work hard to meet strong demands for soy.”

The contracts signed in St. Louis are for the 2008-09 marketing year. USB said during the current marketing year, 436 million bushels of soybeans have been sold to China, representing 45% of all soybean exports. Last year’s sales to China set a record for the most soybeans that the U.S. sold to a single country in one year.

As the U.S. 2008 corn and soybean crops reel under wet Spring conditions followed by flooding in the Midwest, we cannot be surprised to see the Chinese lining up to grab a piece of what might be left. Recent news indicated that the Chinese rice and wheat crops may be threatened as well, by unseasonable weather in southern China.

The story says the purchases equal about ten percent of the total U.S. crop — but the yields are still in doubt and could be much lower than usual. If so, that ten percent could leave our own nation short of beans, an important ingredient in livestock feed as well as for human consumption. The result could be even higher prices for meat, milk, and other foods required right here at home.

The statement from the Soybean Board spokesman is just disgusting. It is “an honor” for U.S soybean growers to sell their products to the grasping Chinese, operators of the largest criminal enterprise in history? I don’t think it’s an honor, it’s just business, grabbing money for profit. What is honorable about that?

And why is it “exciting” to contract to sell so many soybeans to the Chinese when the 2008 crop is in serious doubt, rather than keeping some of it just in case we need it here at home? I think all the excitement is on the part of Vice Premier Wang and his co-conspirators back in the Middle Kingdom for pulling off this well-timed raid on the world’s soybean supply. It is interesting that the contract was signed in St. Louis, Missouri, just down the Mississippi from a flood that is now being compared with the devastating one of 1993.

(more…)

Corn Prices Soar as Bad News Spreads

Monday, June 16th, 2008

By David L. Brown

The flooding in the Midwest is just the last straw for hopes of a decent corn crop in 2008, and the markets have responded by sending the price of corn to over $8 a bushel. Here is an excerpt from the Reuters story on this:

CHICAGO (Reuters) – The worst flooding in the U.S. Midwest in 15 years sent fresh shocks to global markets and consumers as corn prices hit record highs on fears of crop losses in the heart of the world’s top grain exporter.

The price of corn at the Chicago Board of Trade soared above $8 a bushel for the first time as relentless rains and overflowing rivers raised fears that Midwest farmers will not be able to grow much of anything on as many as 5 million acres.

“The market is being driven by water,” said Glenn Hollander, a veteran grain merchant on the CBOT trading floor.

“Estimates show 3 million acres of corn under water and probably 2 million didn’t get planted. So that gets you up to 5 million or over 700 million bushels, and that takes out the entire carry-out,” he said, referring to estimates for grain stocks carried over to the next crop year.

Overwhelmed river levees across Iowa and Illinois, which produce about a third of U.S. corn and soybeans, have also displaced thousands of people.

It is pretty much too late to replant fields that were flooded out, or that have not been planted because of continued rainfall through the Spring. According to this article on the ScienceDaily web site, fields that are planted to corn or soybeans now can be expected to yield no more than 50 percent of usual amounts.

The article quoted Illinois crop scientist Emerson Nafziger, who noted that based on past experience, when corn is planted between June 15 and June 20 “we can expect 50 percent of the maximum yield.” This year saw the third wettest period from January through April since 1895 in Illinois. Nearby Iowa has received 400 percent of average rainfall year-to-date, and as we have reported is now being ravaged by floods and with more than half of its corn and soybean fields under water as of a few days ago.

In Illinois, a major corn state, 95 percent of corn fields have been planted and 88 percent have sprouted — but “less than half of that is reported to be in good or excellent condition,” ScienceDaily says. Fourteen percent of the planted acres are in poor or very poor condition and may have to be replanted. On June 9 Illinois corn averaged only seven inches high, versus an average 17 inches by this time in recent years.

Soybeans are in even worse shape, with only two-thirds of the crop in Illinois having been planted by June 9, compared with an average of 92 percent by that date in recent years. Nafziger said that farmers in the southern part of the state who get soybeans planted by June 25-30 may expect to get 50 percent of normal yields.

We have been raising concerns about the possibility of a poor harvest for some time here, and this season is shaping up as a disastrous one. The eight dollar price of corn puts a stake in the heart of the ethanol industry, fulfilling predictions made here (see my essay “Ethanol Craze Running Into Brick Wall,” posted May 5). With a number of new ethanol plants expected to come on line this year, it was projected that this source would take a third or more of the 2008 corn crop. But despite government subsidies for ethanol, at $8 corn prices they are money losing propositions.

Meanwhile, declining food reserves and the continuing surge in commodity prices makes it clear that turning food into fake fuel is an idea whose time has come … and must soon be gone. When news starts to trickle in from all around the globe about spreading famine, no doubt accompanied by riots and revolution, the image of American farm crops being converted into alcohol to power SUVs and gas guzzling cars will make our nation a pariah. This is a public relations disaster that is about to break, and the best course would be to stop it now. Once the news of famine starts to appear on the nightly news, it will be too late.

Unfortunately, those who are involved in the production of ethanol, something that a top UN official has termed “a crime against humanity,” have resisted facing the fact that their decisions to build dozens of new distilleries were poor ones. During the recent food conference in Rome, spokesmen for the ethanol industry poured out a flood of publicity claiming they were being made the victims of a “smear campaign.”

(more…)

Good News from Our Very Best Friends

Sunday, June 15th, 2008

By David L. Brown

There’s good news today. According to FoxNews.com, the end of high oil prices is in sight, and we owe our thanks to the fearless leader of the United Nations and those humanitarian folks who run Saudi Arabia. Here is the headline and blurb presently topping the FoxNews.com website:

U.N. — Oil Relief Coming
U.N. spokesman says Saudi Arabia will boost oil production by 200,000 barrels a day to deflate gas prices.

Yes, the courageous leader of the U.N., no less a personage than Secretary-General Ban Ki-Moon himself, has bravely gone where no Ban has gone before, into the heart of the Desert Kingdom and former camel ranch to ask the Saudis to solve the world’s oil shortage problem. And he has succeeded! The Oil Sheiks have graciously agreed to increase their daily output of crude by another 200,000 barrels. Yeah! Go you Sheiks! Good on you Ban!

Yes, according to the headline and blurb we just saw, the Saudi decision will “deflate” prices of gasoline (visualize here an over-blown balloon being punctured with a righteous pin). Ban Ki-Moon waves the magic wand, and … voila! … out hops the Rabbit of Unreasonable Hope, right out of the magician’s top hat! Hooray! Thank you Ban. Thank you Sheiks. May Allah smile upon your heads and open the gates of Paradise before you.

That is perhaps how we credulous boobs are supposed to react to this piece of news. But as usual there is more to the story than might be ascertained from the news report. Consider the fact that many if not most consumers of news are innumerate (that’s like being illiterate, only with numbers, not words). They probably don’t know that the world’s oil production has been flat at about 85 million barrels a day for going on three years, or that production is slumping in Russia, Iran, Iraq, Mexico and other places. Only about a week ago Indonesia resigned from OPEC because it is now a net importer of oil! These are solemn clues that should be kept in mind as we contemplate the latest news.

Let’s try to put this in perspective. How much does 200,000 barrels represent in comparison with current total oil production? If you are among the numerate (that’s like literate, only with numbers), put on your mathematical thinking cap and follow along with me. To calculate the percentage of 85 million barrels that is represented by 200 thousand barrels, simply divide the smaller number by the larger number. (I think I learned that in about third grade.)

And the answer is… umm, that can’t be right. Let’s try again. Ooops. Well, it looks like it IS right, and we know that figures can’t lie (but liars can figure, although I swear I’m telling you straight).

Here’s the answer: What the Saudis are pledging to add to the oil supply is actually 0.0023 percent of what the world is already using every day.

That’s only 1/425th of the daily supply! Gosh, what’s the opposite of “Hooray”? And, get that rabbit back in the hat before somebody turns it into hasenpfeffer! (That’s rabbit stew, in case you wondered.)

Ban is pictured making his wonderful announcement wearing a huge smile, a smile such as you might expect to see on the face of a particularly happy angel that just earned its wings or had the Order of Jehovah pinned on its chest. He is beaming with apparent self-pride in having just performed an amazing feat of diplomacy, bringing the world back from the brink so to speak. That must be why he gets the big bucks as head honcho at the U.N.

(more…)

Report from the Ethanol Front in Missouri

Sunday, June 15th, 2008

by Val Germann

Yesterday I made my way to an annual family reunion in north-central Missouri, crossing the Missouri River twice in so doing. Below is the way it looked late yesterday morning at Waverly, about 70 miles downstream from Kansas City.

Missouri River at Waverly

As you can see, it was a bit high! In fact, it was at 28-feet, nearly at the top of the levee system there. Below is the view looking across the river to the elevators in Waverly itself.

1a1-msrwaverly-02r.JPG

I grew up in this part of the country and this is now the third time since 1993 that a “century flood” or “500-year flood” has hit the region. If the levees break in this area, which has also happened twice since 1993, the ten-mile-wide river valley, covered with corn and soybeans, will be flooded. Below is a view of the valley itself, about a half-mile north of the bridge. Not good.

Mo River Valley II

Note the water in this soybean field, one planted late and so already behind in its growing cycle. If you look into the far background you’ll see an irrigation rig, high irony in this season of far too much rain.

All of this bodes ill for ethanol and the new plant that has just gone on line nearby. But first, let’s take a look at the plant near Malta Bend, Missouri, which has been in operation for a few years. Here’s the way it looked yesterday morning, with the sun shining and thoughts of flooding far, far away.
Malta Bend Plant II

Note that this facility is actually built IN a cornfield, which is a help for an ethanol plant. However, this year the corn is only about a foot high, not the three feet it has been the last two years. And note how wet this field is, with water standing near the bottom of the frame. Yields in this area will not match what they have been for 2006 & 2007.

Moving along, to my reunion, the mood among the folks there was, to be blunt, grim, the usual political banter among the men totally missing. The prayer before the meal, given by the eldest present, was about the rain, and the war in Iraq (two more family members there) and ended with a fervent request for protection from on high.

My relative on the board of the local grain-growers co-op, with the ethanol plant just now on line, was as grim as anyone else, in spite of the new plant. You see, he is a farmer first and is just getting hammered by the weather and the sky-high (and rising) prices for ag inputs. Not only that, his fertilizer supplier is demanding he take product that he has forward-contracted for but cannot use yet, due to the wet weather and his lack of storage space!

Oh, yes, if he can get a crop he might benefit from the rocketing price of corn. But he has to get a crop first, far from a guaranteed thing this year.

Getting back to ethanol, here is what the “cracking” tower of the new plant looks like. It is about double the size of the one at Malta Bend.

CC ethanol plant

This plant cost about $80 million to build and is 51-percent owned by the co-op. The taxpayers, believe it or not, have provided $24 million, the rest kicked in by various high-rollers, including the brother of our sitting governor, who has about $500,000 in this thing. It is interesting to note that our governor has pushed through legislation mandating all Missouri gasoline be blended with, you guessed it, ethanol! Hard to believe, isn’t it?

This plant went on line May 22nd and is up to about 60-percent capacity. However, my relative says that with corn selling today (not a futures price, current price) for about $7.00 per bushel, the plant will not make very much money. Not only that, if corn goes much higher it will actively lose money, in spite of being built right in a cornfield, too. Note the view below, looking across the highway.
Hwy 24 corn

The key for these Missouri farmers now is to actually get a crop, any kind of crop. If they do then they can pay for their $5.00 diesel fuel and record-high-priced fertilizers. But if they don’t, if it keeps on raining, well, they could well be wiped out and their brand new ethanol plant become a gigantic, money-losing white elephant.

I’ll be reporting on this later, in August, when I’ll make another trek north to yet another family reunion. Will things be better by then? I certainly hope so.

An Image from Dante’s Vision of Hell?

Saturday, June 14th, 2008

By David L. Brown

The weather across the farm belt is proving to be uncooperative, dashing farmers’ hopes of bringing in a bumper crop to fill the widening gap between the world food supply and hungry population. Yesterday we wrote about the effects of continued rain and flooding.

Now, still six days prior to the beginning of Summer, perhaps we should begin to think about the possibility of unusual heat. We might a clue of what may lie ahead from this map from the Weather Underground web site, showing today’s maximum temperatures for the U.S.:

maxt200806150000_us.jpg
Wow! Looks pretty hot, doesn’t it? The bright red areas denote highs in the range of 90 degrees F. Note the pink shades in the Southwest and down the Southeast, denoting temperatures ranging from the upper 90s and into the 100s. There are already reports of heat stress in many areas in the South. And even the corn belt areas that have been hit by unremitting rainfall this season are already experiencing high temperatures ranging into the upper 80s and lower 90s.

And this is only June 14. What will we see a month from now, or six weeks from now, when the critical Summer growing season is in full swing?

Crops that are now being weakened due to late planting, flooding and frequent and unseasonable rainfall will be ill prepared even for normal Summer heat — and if this year turns out to be significantly hotter than usual the effect on corn and soybean yields could be devastating.

If the above map reminds you of some illustration from Dante’s Inferno, perhaps there is a bit of truth in the comparison. According to the key at the bottom of the chart, as daily peak temperatures rise the colors will turn to pink, and even white should the heat exceed 120 degrees F. To keep up with this unfolding climate story, bookmark this link and refresh when you return to it from time to time. If things across the farm belt start to look “in the pink” as we progress into Summer, I suspect an interesting season awaits us.