What ethanol is doing to corn prices in the US

I culled these stats from the Cost of Corn, a report on Kellogg’s profitability last year in mlive.com (everything Michigan) in a report by B. Candace Beeke.

* Ethanol production adds 30 cents to the value of a bushel of corn, according to the U.S. Department of Agriculture.

* That increases the closer you get to the ethanol plants, which adds another five to eight cents a bushel.

* Ethanol production adds $4.5 billion to U.S. farm income annually, the National Corn Growers Association reported.

“In the 2005-2006 crop year we finished in September, the U.S. used just under three million bushels of corn for processing. That includes industrial use in addition to ethanol,”

Neill McKinstray, director of ethanol services for the Andersons Inc., based in Ohio and operating an ethanol plant in Albion, Michigan said

 ”In 2007-2008, which is the crop year starting a year from now, we’re expected to use almost 4.5 million bushels for processing and industrial. Ethanol represents the fastest-growing demand for corn in the U.S.”

Andersons is paying $4 a bushel on the spot market for the material they use to create ethanol

McKinstray, says the rising corn price

“has impacted the profitability of ethanol plants. It ha impacted other project’s willingness to go forward. It has impacted animal feed costs and ultimately the cost of meat and poultry. It’s impacted the price of Kellogg’s Corn Flakes.”

He should know… look out for more of this kind of stuff in the mainstream media… I wonder if there’ll be a knock on into global inflation in 2008 2009. Get your pay rises in early.

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