Today in Biofuels: Texas A&M study says oil, speculation, not ethanol the cause of corn prices hikes; $1.50 cellulosic ethanol fuel; China to become net corn importer

Top Story:

Researchers from Texas A&M University have concluded that eliminating the Renewable Fuel Standard “does not result in significantly lower corn prices,” and that “The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100 per barrel oil.” The report said that, in addition, speculative investment in the commodities futures markets were leading to price volatility, and “the loss of the ability to use futures markets for price risk management due to the inability to finance margin requirements.” Commenting on the report, National Corn Growers Association president Ron Litterer said “The Texas A&M study dispels the food vs. fuel debate. This study shows there are many forces creating increases in food costs and ethanol is not a major factor. ”

Producer News:

In Minnesota, a new “Butterfield Closed Cycle System” was introduced by Diversified Ethanol Corporation, reducing water consumption in ethanol production by 89 percent. The small-scale, modular systems can be used by breweries, beverage recycling and food processing facilities to convert liquid waste into ethanol.

In Nebraska, Prime BioSolutions has developed a closed loop facility that combines a 25 Mgy ethanol plant with a 30,000 head cattle operation. The process captures 12,000 pounds of nitrogen per day, enough to provide nitrogen inputs for soil needs, while providing wet feed to cattle, eliminating the need for dryers for distillers grains or feed transportation.

In California, ZeaChem said that its cellulosic process can produce up to 160 gallons of ethanol per ton of biomass, and that a farm with a radius of eight miles could produce 300 Mgy of ethanol per year from wood waste, switch grass,  or other waste, with a net return on energy of nearly 10 to 1 and a price at the pump of around $1.50 per gallon.

International News:

In Canada, Dynamotive Energy Systems signed 10-year contracts for 150,000 dry tons of biomass annually, including sawdust and other forest operations residue, as feedstock for its proposed ethanol plants in Corrientes province, Argentina. Previously, the Argentine waste biomass was stockpiled or burned.

China is set to become a corn importer, despite halting all corn ethanol related development projects. The USDA estimates that China has a 35 million ton corn stockpile, but China is expected to be a net importer after recording exports of 16 million tons in 2003. Currently, ethanol producers such as Henan Tianguan Enterprise Group have switched to a blend of 60 percent wheat, 20 percent corn, 10 percent cassava and 10 percent sweet potato, to meet China’s goal of producing 6.7 million tons of ethanol fuel ( 2 billion gallons). At 20 percent usage of corn, China will require 4 million tons of corn to meet its ethanol targets.

In the Philippines, the Canadian firm Green Corp. announced that it will invest $25 million in an 8 Mgy coconut-based biodiesel operation, spread over 100 villages and 5,000 farming families. Each of the villages will be provided a small-scale biodiesel processor over a two-year period.

World Opinion:

The News-Leader ran a column entitled “The Willow Brook Foods bad-news headline would have been more accurate if it announced, “Lost to Ethanol, 780 Local Jobs,” after a local food processing plant closed.

Blogggingstocks reported that “While Al Gore is busy preaching about global warming and environmentalists around the world hail ethanol as a solution to the “global warming” problem, the less fortunate, poorer countries in the world are in the midst of political turmoil as citizens riot and protest over soaring food prices.”

The New York Times ran an article titled “Fuel Choices, Food Crises and Finger-Pointing” on the pressure building for Western governments to rescind biofuels targets in the face of a global food crisis.

The UK’s Independent ran an article on protests in the UK as the Renewable Transport Fuel Obligation (RTFO) comes into force today.

Research News:

In Washington State, the USDA awarded $840,000 to a Washington State University research team to develop means of generating phenols in poplar trees. Phenols have similar properties to petrochemicals.

Policy and Policymakers:

Minnesota Public Radio ran a report on lobbying efforts by food-related organizations supporting the elimination of the 54-cent ethanol tariff; the importation of cheap Brazilian ethanol into the United States would reduce grain costs for food processors.

Consumer and Fleet News:

In California, a local boat owner is seeking to establish a class-action suit against ethanol blenders for not providing appropriate notice to boat owners with older fiberglass fuel tanks. The suit alleges that that defendants Chevron, Exxon Mobil, Shell and other oil companies caused more  $35,000 in damages to his boat from ethanol blended fuels.

In Michigan, Art Van Furniture has commenced conversion of its its 400-truck fleet to B20 biodiesel.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, fell 0.18 percent to close at 119.70 as ethanol gains offset small agribusiness drops.  For the day, Archer Daniels Midland (ADM) fell 0.19 percent to $42.95 as the company filed a non-ethanol related dumping complaint against Canada and China, while VeraSun Energy (VSE) rose 1.14 percent to $7.10 to lead ethanol stocks.   Among small caps, Bio Solutions Manufacturing (BSLM.OB) rose 47.06 percent to $0.005 rose 7.30 percent and MGP Ingredients (MGPI) gained 6.35 percent to close at $7.54. Overall, declines and advances were even for the day.