Supply & Demand of US/World Coarse Grains

A highlight for the 2012 Export Exchange was Dr. Joe Glauber’s comments on the supply and demand of the United States and worlds coarse grains. Dr. Glauber is the Chief Economist for the United State Department of Agriculture. Attendees from across the world listened as he discussed the aftermath of the US drought and the goals for price moderation worldwide.

“No surprise I talked about the drought and the effect on corn and soybeans primarily. This was a global conference so wheat, as well. Clearly the drought was a the big story this summer. It certainly affected prices. As we look forward I think the key thing in terms of price moderation is the world is now turning to the South American soybean crop and we should have more information on that in the next couple months. The real issue will be what it means for spring planting here in the United States. I think given these prices we are going to see strong acreage again for corn and soybean. Hopefully we’ll see better yields and some rebuilding of stocks and some moderation of prices because the livestock side of the sector has been hit pretty hard.”

Listen to my interview with Dr. Glauber here: Joe Glauber Interview

Of particular interest to the ethanol industry, Dr. Glauber spent several minutes of his presentation discussing how the drought, corn prices and other factors have influenced ethanol production this year, as well as some insight on the blend wall and the Renewable Fuel Standard (RFS). Listen to that portion of his remarks here: Joe Glauber ethanol comments

Listen to Dr. Glauber’s entire presentation here: Joe Glauber at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange

USDA Announces 6th Regional Biofuels System

The U.S. Department of Agriculture today announced a research grant to develop next generation biofuels in the Northeast.

Agriculture Secretary Tom Vilsack today awarded Pennsylvania State University a five-year research grant valued at roughly $10 million to develop biomass supply chains for the production of liquid transportation and aviation biofuels in the Northeast. This is the sixth such award made through USDA’s Agriculture and Food Research Initiative (AFRI), aimed at developing regional, renewable energy markets, generating rural jobs, and decreasing America’s dependence on foreign oil. In September 2011, the Secretary announced five major AFRI grants for the formation of five regional systems in the Pacific Northwest, the Northwest, Northern states, Southern states, and the Southeast. Today’s announcement underscores USDA’s support for public and private research in building the framework for a competitively-priced, American-made biofuels industry in every major American region.

During a press conference this morning, Vilsack said the goal is to develop alternatives to corn-based ethanol, with each different part of the country focused on different feedstocks and production methods. “This particular project is going to look at miscanthus and switchgrass and willow,” said Vilsack. “It’s possible that we can grow these biomass products on strip mines to restore the land or on marginal flood plane lands.”

Vilsack noted that the project will include support from a number of different educational institutions and companies, including Ernst Conservation Seeds, Case New Holland, Praxair, Inc., Idaho National Lab, Mascoma Biofuels, Primus Green Energy, and Double A Willow. “All of these companies are identifying feedstocks or processing by which these feedstocks can be grown and harvested, so it’s a coordinated effort,” said Vilsack.

Listen to Vilsack’s press conference here: USDA Pennsylvania Biofuels Announcement

Vilsack Defends Ethanol at Dairy Expo

Secretary of Agriculture Tom Vilsack held a town hall meeting at World Dairy Expo in Madison, Wisconsin this week and took questions from the audience, one of which concerned ethanol and the impact it has had on livestock producers.

The questioner, who was from California, said ethanol was “not a very popular word” with dairy farmers in her state. “Where I come from ethanol is not a four letter word,” Vilsack responded, noting that ethanol has not only helped increase profitability and production for farmers but also helped the economy, national security, and the environment. “Those are the benefits – jobs, higher incomes, lower gas costs, environmental benefits and reduction of our reliance on foreign oil,” said Vilsack.

The secretary also carefully explained that because ethanol returns livestock feed to the market in the form of distillers grains (DDGS). “We hear a lot of people say that 40% of the corn crop is being used for fuel production but it’s not really 40% because a third of it comes back in DDGS which is used by the livestock industry,” he said. “So, it’s less than 40%, more like 27 percent.”

In addition, Vilsack talked about how USDA is helping the industry move into the production of advanced ethanol using feedstocks beyond corn. “We have financed at USDA nine separate biorefineries that use corn stover, algae, switchgrass, woody biomass, agricultural waste, municipal waste,” he said.

Vilsack also defended the Renewable Fuel Standard (RFS) and the current request before EPA to waive that standard, noting that Congress passing a new food, farm and jobs bill would do more to help livestock producers impacted by high feed costs due to the drought than waiving the RFS would.

Listen to or download Vilsack’s comments here: Ag Secretary Vilsack on ethanol at Dairy Expo

Biofuels Help Boost Co-op Income

USDA celebrated October National Cooperative Month and the United Nations International Year of Cooperatives with the release today of the top agricultural cooperatives and their revenues for 2011.

According to the release, farmer, rancher and fishery cooperatives posted record sales last year of $213 billion and $5.4 billion in net income, surpassing the previous record sales year of 2008 by $10 billion while besting the old income record by $500 million.

“These new cooperative sales and income records for 2011 underscore the strength and productivity of the nation’s farmer- and rancher-owned cooperatives, and the vital role they play in the nation’s economy,” said Dallas Tonsager, under secretary for Rural Development. “Primarily because of mergers, the number of farm co-ops continued to decline, but memberships and asset values are up.” Tonsager also noted that co-op employment levels remained strong, with cooperatives employing 184,000 full-time, part-time and seasonal workers, up slightly from 2010.

CHS Inc. of Saint Paul, Minn – an energy, farm supply, grain and food co-op – was once again the nation’s largest ag co-op, with $36.9 billion in revenue in 2011, up by a whopping 50% from 2010. Part of the CHS cooperative portfolio is CHS Renewable Fuels Marketing, a leading ethanol marketer, and that part of the business helped the co-op boost revenues in 2011. The fourth ranked agricultural cooperative, GROWMARK, also markets biofuels under its energy division.

While not included under the list of agricultural cooperatives, Tonsager notes that “many of the ethanol plants across the country, or biofuels projects, either are cooperatives or cooperative-like institutions, where they are limited liability companies that have a democratic vote.”

Listen to or download Tonsager’s remarks here: USDA Under Secretary Dallas Tonsager

Fuel Prices Are Impacting Farms and Businesses

Our latest ZimmPoll asked the question, “Have high fuel prices had an impact on your farm/business?”

Our poll results: Sixty-four percent said Yes, big impact on our budget; fourteen percent said Yes, minimal impact on our budget; twelve percent said No, not yet; and ten percent said No, don’t expect any.

Our new ZimmPoll is now live and asks the question, “What grade would you give the new student lunch program? Tell us why with a comment.” New government nutrition standards, which went into effect this year in a bid to combat childhood obesity, require schools to serve more variety and larger portions of fruits and vegetables. What do you think – are these new lunches a good thing or will students just toss more food in the trash can?

ZimmPoll is sponsored by Rhea+Kaiser, a full-service advertising/public relations agency.

Vilsack Frustrated by No Farm Bill

Congress left town last week without even considering a new farm bill in the House, leaving the current bill to expire at the end of this month. House Speaker John Boehner (R-OH) said they would deal with a farm bill after the election because he did not believe there were 218 votes to pass either an extension or new legislation.

“It just didn’t have to be,” said a frustrated Secretary of Agriculture Tom Vilsack on Friday. “They would have had 218 votes if they had worked it. It’s really unfortunate.”

Vilsack believes this is a set back to a thriving rural economy. “Rural America has great momentum that’s been built with record exports, record conservation acres, record expansion in biofuels and biobased products,” he said. “We want to add to that momentum and what we’re doing now is creating this uncertainty which creates a real problem for momentum to continue.”

Vilsack fears that Congress will not pass a new farm bill during the lame duck session, meaning the measure would have to wait until the new Congress, which means the already passed Senate bill would be dead and they would have to start from scratch.

USDA Report Release Times to Change

USDA is changing the release time of certain key statistical reports beginning in January 2013.

According to a USDA news release the National Agricultural Statistics Service (NASS) and World Agricultural Outlook Board (WAOB) will begin issuing several major USDA statistical reports at 12:00 p.m. EDT beginning in January 2013. The current USDA release time of 8:30 a.m. EDT will remain in effect until January 1, 2013. USDA statistical reports affected are: World Agricultural Supply and Demand Estimates, Acreage, Crop Production, Grain Stocks, Prospective Plantings, and Small Grains Summary. The time for livestock reports currently released at 3:00 p.m. will not change.

USDA officials made the decision about the release times after considering nearly 150 comments submitted by stakeholders during a 30 day comment period between June 8 and July 9, 2012. “USDA considered all comments and thanks everyone for their thoughtful suggestions,” said USDA Chief Economist Joseph W. Glauber. “The shift to a noon release allows for the greatest liquidity in the markets, provides the greatest access to the reports during working hours in the United States, and continues equal access to data among all parties.”

USDA Slightly Lowers Corn Crop

USDAThe September crop production forecast from the U.S. Department of Agriculture slightly lowers this year’s drought stricken corn crop to 10.7 billion bushels, with an average yield of 122.8 bushels per acre – the lowest since 1995. That would still be the eighth-largest corn crop in history, despite the worst drought conditions in more than 50 years.

On the demand side, the latest World Agricultural Supply and Demand Estimate increased 2012/13 livestock feed demand by 75 million bushels to 4.15 billion. Corn use for ethanol and co-products was unchanged at 4.5 billion bushels. However, the Renewable Fuels Association (RFA) notes that because about one-third of every bushel of corn used for ethanol returns to the feed market as distillers grains, feed use will account for approximately 5.5 billion bushels in 2012/13 on a net basis, compared to net corn use for ethanol of 3.15 billion.

“This report should bring some calm and increased certainty to the markets,” said RFA President Bob Dinneen. “With each passing day, we have a better sense of the size of this year’s crop. We are thankful that it appears very little additional damage was done to the corn crop in late August and early September. It is truly remarkable that even in the face of the worst drought in 50 years and the hottest July in recorded history, U.S. farmers were able to produce a corn crop of this size. This morning’s report also clearly shows that all end users are sharing in the pain and participating in demand rationing. The notion that the ethanol industry is somehow insulated from demand rationing because of the RFS is shown to be patently false, with ethanol use projected down 10% from last year and feed use reduced by less than 6%.”

Globally, USDA is projecting the second-largest corn crop in history. Production in Argentina is up more than 30% over last year, while Mexico increased output 19%, South Africa 17%, Canada 9%, and China 4%. At 2.71 billion metric tons, USDA is also expecting the total 2012/13 grain supply (coarse grains, wheat, and rice) to be the second-largest ever. The U.S. ethanol industry is expected to use just 2.9% of the global grain supply in 2012/13.

Ag Secretary Highlights Biofuels During US Ship Visit

US Agriculture Secretary Tom Vilsack went aboard the USS Monterey at the Naval Station Norfolk to highlight the commitment the military is making to advanced biofuels. He was joined by Deputy Assistant Secretary of the Energy for Navy Tom Hicks.

“Developing the next generation of advanced biofuels for our nation’s military is both a national security issue and aneconomic issue,” said Vilsack. “By utilizing renewable energy produced on American soil, our military forces will become less reliant on fuel that has to be transported long distances and often over supply lines that can be disrupted during times of conflict. Meanwhile, a strong and diverse biofuels industry will support good-paying jobs in rural America that can’t be shipped overseas. Through this joint effort, USDA and the U.S. Navy have the opportunity to create a model for American energy security while ensuring the safety of our troops and the long term viability of our armed forces.”

“Secretary Vilsack’s leadership and the work carried out by USDA on alternative fuel is so critical to the Navy’s efforts to address a critical military vulnerability; our reliance on foreign oil,” stated U.S. Navy Secretary Ray Mabus.

Earlier this summer, the U.S. Navy’s “Great Green Fleet,” a carrier strike group, including aircraft and surface ships, ran on biofuels off the coast of Hawaii as part of the Rim of the Pacific Exercise (RIMPAC). The Navy, USDA and the Department of Energy recently announced $30 million in funding for “drop-in” biofuel substitutes for diesel and jet fuel.

“Forever Young” Switchgrass for Cellulosic Ethanol

Scientists at the USDA might have found a way to keep switchgrass forever young and better for cellulosic ethanol. Agricultural Research Service (ARS) geneticist Sarah Hake, working with University of California-Berkeley plant geneticist George Chuck, found that taking a gene from corn called corngrass and inserting it into switchgrass keeps the grass always in a juvenile form that doesn’t flower, doesn’t produce seeds, and doesn’t have a dormant growth phase. And that means the sugars in the plant starch are more readily available for conversion into cellulosic ethanol.

The scientists observed that the leaves in the transgenic switchgrass are not nearly as stiff as leaves in switchgrass cultivars that haven’t been modified. In addition, they determined that leaf lignin is slightly different in the transgenic switchgrass than leaf lignin in other plants. This could lead to new findings on how to break down the sturdy lignin and release sugars for fermentation, a development that will be essential to the commercial production of cellulosic ethanol.

The researchers are now introducing DNA segments called genetic promoters that would “turn on” the expression of the corngrass gene just in aboveground switchgrass shoots. This could help increase root mass development that otherwise would be inhibited by the gene. Hake and Chuck also suggest that developing nonflowering switchgrass varieties would eliminate the possibility of cross-pollination between transgenic switchgrass cultivars and other switchgrass cultivars.

The work was published in 2011 in Proceedings of the National Academy of Sciences.

DF Cast: Debating the RFS Waiver

The EPA has just started the 30-day comment period for a proposed waiver of the Renewable Fuels Standard (RFS). And just as the comments started, the National Corn Growers Association has asked for even more time for comments to come in.

But there’s no lack of viewpoints already out there. In this edition of the Domestic Fuel Cast, we’ll hear from National Turkey Federation president Joel Brandenberger, Purdue University’s Wally Tyner and Chris Hurt, former Secretary of Agriculture Clayton Yeutter, and Growth Energy CEO Tom Buis giving their thoughts about a possible RFS waiver.

You can listen to the Domestic Fuel Cast here: Domestic Fuel Cast

You can also subscribe to the DomesticFuel Cast here.

Vilsack Announces 106 Renewable Energy Projects

Agriculture Secretary Tom Vilsack today announced 106 projects in 29 states, Guam and Puerto Rico have been selected for funding to make renewable energy and energy efficiency improvements. Money for the projects comes from the USDA Rural Development’s Rural Energy for America Program (REAP), authorized by the 2008 Farm Bill.

“The Obama Administration is helping agricultural producers and rural small business owners across the country reduce their energy costs and consumption,” Vilsack said. “This is part of the President’s ‘all-of-the-above’ energy strategy, which involves expanding support for traditional as well as alternative energy sources. Stable energy costs create an environment for sustainable job growth in rural America.”

The release highlighted projects such as a Washington County, Iowa wind turbine on a farm and an anaerobic digester in Wisconsin that will produce enough power for 420 homes each year. You can see the complete list of projects here.

REAP provides grants and loan guarantees for agricultural producers and rural small businesses to reduce energy consumption and costs, use renewable energy technologies in their operations and conduct feasibility studies for renewable energy projects. USDA has an active portfolio of more than $170 billion in loans and loan guarantees.

Most Positive ACE Conference Ever

Despite a drought that is lowering the corn crop and causing ethanol plant shutdowns, American Coalition for Ethanol Executive Vice President Brian Jennings thinks the organization’s 25th annual conference last week was the most positive ever.

“We’re really encouraged and enthused about how the conference went,” said Jennings. “We know things are tough out there but we ended this conference on the most positive note I think we’ve ever ended a conference.”

Jennings was especially pleased with the strong support from Agriculture Secretary Tom Vilsack for both ethanol and the Renewable Fuel Standard and they agree with Vilsack’s view of keeping the RFS in place despite a lowered corn crop. “We won’t know how many bushels are produced until harvest,” he said. “It is premature for the calls that have been made to waive the RFS.”

Listen to my wrap-up interview with Brian Jennings here: ACE EVP Brian Jennings

2012 ACE Conference Photo Album

During the conference, three new board members were elected.

  • Paul Enstad, Board of Governors Chairman for Granite Falls Energy, LLC, a 60 million-gallon-per-year (MGY) ethanol producer in Granite Falls, MN
  • Doug Punke, CEO of Renewable Products Marketing Group (RPMG), an ethanol marketing company in Shakopee, MN
  • John Christenson has joined the ACE board representing Christianson and Associates

In addition, four board members were re-elected.

  • Ron Alverson, Wentworth, South Dakota, representing Dakota Ethanol
  • David Gillen,  White Lake, South Dakota, representing South Dakota Corn Utilization Council
  • Wallie Hardie, Fairmount, North Dakota, representing North Dakota Corn Growers Association
  • Brian Wilcox, Columbus, Nebraska, representing Nebraska Public Power District

RFA Puts USDA Crop Report in Context

Renewable Fuels AssociationRenewable Fuels Association Vice President of Research and Analysis Geoff Cooper put together an analysis of today’s USDA crop supply report on the RFA E-xchange Blog to put the report into perspective from both a historical context as well as a global production context, answering calls from some international voices to end global biofuel production.

“As expected, this morning’s supply-demand estimates from USDA showed a big reduction in the size of the 2012 corn crop and average yield. Today’s report estimates average yield at 123.4 bushels per acre (bpa), down nearly 23 bpa from USDA’s July estimate and the lowest yield since 1995. Harvested acres are pegged at 87.4 million, meaning a crop of 10.78 billion bushels (bbu) is expected. This is down more than 2 billion bushels from USDA’s July estimate and would be the smallest crop since 2006. Today’s USDA numbers were slightly worse than expected by analysts; on average, they had expected a crop of 10.97 bbu on a yield of 126.2 bpa. While this year’s harvest will be considerably smaller than initially expected, it is remarkable that farmers are still expected to produce the eighth-largest corn crop on record despite experiencing the worst drought in 50 years and the hottest month of July in recorded history.”

Listen to an interview with Cooper here: RFA's Geoff Cooper on USDA crop forecast

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Ag Secy Vilsack Stresses Support of RFS

Agriculture Secretary Tom Vilsack demonstrated his strong commitment to the ethanol industry and the Renewable Fuel Standard (RFS) by spending over an hour at the American Coalition for Ethanol (ACE) conference on Friday morning.

“This is an industry that is worth supporting,” he told the crowd of about 250 ethanol industry leaders. “Which is why the president is supporting the Renewable Fuel Standard, and it’s why I’m supporting the Renewable Fuel Standard.”

In light of the lowered crop forecast for corn due to the drought, Vilsack noted that the RFS has built-in flexibilities and the market is responding as it should. “The market responds, the market reacts, the market pays attention, and we’re already seeing that,” he said.

Vilsack stressed the need for the industry to defend itself in the face of attacks by critics.

Listen to Vilsack’s remarks here: Secy Vilsack at ACE


2012 ACE Conference Photo Album