Grains gaining ground again

Grains made new highs in the last week on the Chicago Board of Trade, but show signs of giving it back this week.

Some corn, soybean, and wheat contracts made new highs once again on the Board, but significant losses overnight going into the Tuesday trading have the new highs standing out on the Board.

Prices struggled during the day Monday, with lower openings, then a return near the previous day’s trading. That now would appear to be the harbinger for a Turnaround Tuesday.

Before the open Tuesday morning, March corn futures are down over nine cents, and the beans and corn are down over 12 cents on the overnight.

Green light for E-15

EPA made the big announcement Friday of the long-awaited OK for E-15 for cars made 2001 and after. This comes after an earlier announcement of E-15 for newer cars.

The news was met with the usual mix of reaction. Opponents of ethanol say the testing on the cars is incomplete.

If I could buy any, I would let you know how it goes in my 1989 Mercury. It has been thriving on E-10, and I am hard pressed to imagine much difference. If it trashes it, my son’s mother-in-law from Tennessee better not find out. 60,000-mile vintage cars are hard to find, and she was the source of this one.

Proponents of ethanol, meaning anyone with any sense in the ag community, are cautiously optimistic about the results of more ethanol in gasoline.

If all gas went to 15 percent ethanol, we would be using 7.5 billion bushels of corn to produce it. That used to be our entire crop, and is now just over half of the crop.

Can’t pump it up

How, in fact, do you sell E-15, however? I can’t imagine every station putting in another pump at each pump complex, and another underground tank. A third of the cars would still be before 2001, like my Grand Lady, so the stations would not want to give up selling for them. Could they put in one accessory pump over on the side for low-ethanol gas and charge a premium, like they do for kero?

And, even if the stations saw a way to do it, we don’t have enough ethanol yet.

However, the demand would give one more boost up to corn prices.

Ethanol does not have a lot of fans outside the ag community. We say that it helps our pollution problems, but the clean-air arguments can be made from both sides. It is true that the first slug of ethanol demand came when ETBE was outlawed.

Cheap food debate

The big objection to ethanol is more personal. Even some of my conservative commentators argue that the ethanol boom has caused food prices to go dramatically higher all over the world.

I have sympathy for the Mexican peasant who is eating his way through (they forget to notice) the U.S. supply of white corn, none of which goes to ethanol. I know, the prices are run up just the same.

However, this begs the old question of why exactly it is the farmer’s responsibility to provide cheap food for the world if there is a way of making his product worth more?

I don’t see Shell and BP lining up cars at their stations to sell gas at half price for the good of the consumer.

Back to business

Looking for a moment at the prices, we see that March corn futures made a new high on January 21st at 6.67. This morning it is back to 6.46, 21 cents off the high.

November soybeans made a new high at 13.64 on Monday, but is now 13.23. The old beans made a March futures high of 14.32 1/2 back on the 13th, and have been mostly sideways since then. Current trading is at 13.92.

This would indicate the old beans have run out of steam, but the new are rallying to get closer to the old crop in price.

In corn and in beans, next year’s prices are significantly lower. March wheat futures made a new high of 8.39 1/2 Monday, and have held most of the gain. We are now at 8.35 1/4 on the March.