Daniels Trading Senior Broker & Grain Analyst Contribution Editor Craig Turner was featured in the Voice of America video and article titled “Midwest Farmers Concerned with EPA Changes to Ethanol Standards.” The video and article focus on how reduced ethanol demand may lower prices for corn in the Midwest.
Demand for ethanol, a liquid fuel created from corn, grew in 2007 when the Renewable Fuel Standard, or RFS, was put in place. The RFS mandated that fuel makers blend ethanol into their gasoline, with the amount increasing over time. That was good news for corn producers like Duncan, who saw a steady increase in demand for their product… and its price. Times, however, are changing, says GrainAnalyst.com contributing editor Craig Turner.
“We’ve hit the blend wall. Since 2008, the United States consumes about 9 percent less gasoline than we used to. We can only use 10 percent of ethanol in a gallon of gasoline [before it harms some engines], and we basically hit that wall. So we can’t produce any more ethanol; we have to stay the same, and if fuel efficiency gets even better, then the ethanol mandate could come down even further,” said Turner.
Turner says one ironic factor driving down demand for ethanol is the growing number of fuel-efficient vehicles on the road.
“Every year we take older cars off the road and replace them with more fuel-efficient cars, we’re going to be using less gasoline, so now that we’ve reached this peak in corn ethanol it’s actually hurting farmers,” he said.
“We’re happy for the market, but we have ever increasing yields, and ever increasing production capabilities, for ethanol, and we were kind of planning on the EPA following through with their increase and inclusion of green fuels,” he said.
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