Ed,
The peak of corn pricing this year
coincided with the crescendo of voices from your planetgore guys, as well as all
the other anti-ethanol writers like David Freddoso, Charles Krauthammer, the New
York Times (???), and a legion of others who were decrying the horrible and
morally indefensible American ethanol subsidies that were starving little kids
in Africa and China - who apparently until this year lived on subsistence diets
composed mostly of Kelloggs Corn Flakes and Cap'n Crunch.
At the time, I recall corresponding with you
and others (and I posted accordingly on my blog, (http://dejavu.blogtownhall.com/)
arguments that, no, it's not corn ethanol that's driving up the price of corn,
but rather, it is the bubble in all commodities prices -
including crude oil, steel, concrete, gold, wheat and rice (neither of which
grain is used for ethanol production in the USA), hog bellies, etc.
etc.
I argued then (as I am vindicated today)
that the commodities bubble was driven by other factors that have
absolutely nothing to do with US energy subsidies ... principally those factors
included the weak US dollar, and a large accumulation of investor cash that had
fled the bleeding real estate and financials markets last year, looking for a
place to land ... which then suddenly discovered
the almost unregulated commodities markets. The record inflow of cash into
commodities hedge funds was well documented by Lehman this spring (http://www.bbj.hu/main/news_39582_lehman%2Bwarns%2Bof%2Bcommodity%2Bbubble.html),
and appropriate "bubble" warnings were issued. It all made for a commodities
bubble that was bound to burst ...it was only a matter of time.
Of course, any time one is dealing with
agricultural products, you have all the usual temporary weather related factors that tend to
increase or decrease the annual corn crop in various corn-producing areas of the
world.
And of course, all the commodities analysts
this summer were scratching their heads and wondering why prices were so high,
given the fundamentals of supply and demand across the board.
Now all of a sudden, the US financial
markets are beginning to stabilize, and the US dollar is up, and guess what?
Corn prices are down 32% from the June peak, crude oil prices
are down 20%, gold prices (which, the last I checked, not too many starving kids
in Africa and China were munching on Kelloggs Gold Flakes), copper, hog bellies,
etc are all down similar amounts from their early summer highs.
Wasn't that just a few weeks ago? Whew ....
how facts change in a hurry, sometimes!
The bottom has not yet been reached on
commodities, either. As the referenced AP article states, neophyte commodities
investors are getting the hell out of Dodge as fast as they can get ... perhaps
before we are done with the commodities correction this year, farmers may be
lucky to dump their excess corn on the ethanol makers at prices that at
least cover their cost of production.
Now we all know that corn ethanol is not the
most efficient means of producing domestic liquid vehicle fuels, and that over
time we should and no doubt will develop more energy efficient processes, likely
using other non-food feedstocks such as switchgrass, farm waste, and algae. But
corn is what we have today. And like Donald Rumsfeld was fond of saying a few
years ago ... you go to war with the army you have.
But can planetgore admit just for once that
all of the previous caterwauling over the "immoral conversion of corn to fuel"
was hyperbole of the nth degree?
And that worldwide food prices were driven
upward this year by a commodities bubble that equally affected all
commodities, not just corn, and not just food?
And that the starving kids in Africa and
China never ate much American corn to begin with, and were not eating
less American corn this year because of supply constrictions.
Over 90% of America's corn crop
historically has not gone to direct human consumption, but
rather has either been fed to livestock - to produce American beef, pork, and
chicken that starving kids in Africa and China never ate anyway - or has
been used as sweeteners and other food additives for highly processed foods like
Cap'n Crunch cereal and Hostess Twinkies- again, these are foods that the
starving kids in Africa and China never ate anyway.
And can we also stipulate that during the
same 2007/2008 market year during which the corn/commodities bubble
peaked, US Corn production was at a record high, and US corn exports
(i.e., the small part of the US corn crop that actually does go to feeding
starving little kids in Africa and China) increased from the year
before? If you don't believe me, just check it out at the USDA's website
document at http://www.ers.usda.gov/briefing/Baseline/crops.htm ...
the data were always there for all to see (and ignore).
No, Ed ... it was just a lot more convenient
for the alt energy naysayers to blame the commodities up tick this year on corn
ethanol, the government waste poster child du jour, because
it comported with their ant-alt energy planetgore world view.
I swear, sometimes the self-described
conservative media exhibit just as much ideological blindness and argumentative
frivolity as do the lefty yahoos at the New York Times, CBS News, and the rest
of the MSM.
I say that as a lifelong Republican and
conservative. But people are still people, right or left ... and people like to
pile on even when the facts simply don't support their ideology, whether left or
right.
Sincerely
Duane Truitt