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Agricultural News

Can Ethanol Industry Figure Out Cellulosic Ethanol to Salvage Current Renewable Fuel Standard?

Wed, 29 Feb 2012 10:43:22 CST

Can Ethanol Industry Figure Out Cellulosic Ethanol to Salvage Current Renewable Fuel Standard? Corn prices are solidly on a new higher price plateau- and they are not going back- so contends William Lapp, Grain Economist with Advanced Economic Solutions. Lapp says that the higher corn prices is broad based- and means that other grain and oilseed prices are at higher levels as well in the last couple of growing seasons. Lapp says that one fallout of the higher corn prices that are now in place- meat production in retreat. He says that this overall environment of strong grain prices has meant lots of competition for available crop acres.

One evidence of this is being seen in Canada, where Lapp says he has just returned from Canada, where a combination of factors is resulting in farmers in the western provinces choosing to plant more acres of canola then spring wheat. The factors include the demise of the Canadian Wheat Board, in concert with strong oilseed demand globally. Lapp says that the US is buying canola oil from Canada to help replace soybean oil produced in this country but beiong used in bio diesel rather than going for food uses.

In regards to biofuels- Lapp contends that he sees us getting very close to a peak in ethanol production in this country, based on the Renewable Fuel Standard that is now in place. In fact, he says we right at the 15 billion gallon top when it comes to ethanol from grains. The problem the ethanol is facing now with the current RFS relates to the abject failure to date of cellulosic ethanol. Lapp points out that we are 95% short of targets set by Congress in the RFS for 2012- and that will grow worse in the next couple of calendar years since we are not close to widespread commercial production of cellulosic ethanol. Lapp adds that it is very uncertain that this next generation of ethanol will ever be able to live up to expectations- which means that ethanol may be in its eighth inning of a life cycle.

Lapp spoke to a media audience at the Bayer Crop Science Ag Issues Forum 2012 in Nashville, Tennessee at the front end of the 2012 Commodity Classic. After his presentation, we talked with him, along with Farm Broadcast colleague Mike Hergert of the Red River Network of North Dakota- click on the LISTEN BAR below to hear his comments on corn demand, the future of ethanol and more.


Ron Hays talks with William Lapp on corn and oilseed prices and demand- and a look at ethanol's problems.
right-click to download mp3


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