Green Options » commodity prices

U.S. Stocks Advance in Election Day Rally Signifying Hope For Climate Policy

Reenita Malhotra — Tue, 04 Nov 2008 19:58:19 +0000

U.S. stocks advanced today in the biggest presidential Election Day rally in 24 years. This has been led by energy and banking shares, on higher commodity prices and speculation the Treasury will bail out more financial companies. (Bloomberg)

According to Philip Orlando, who helps manage $330 billion as chief equity strategist at Federated Investors Inc. in New York, “The elimination of the uncertainty of the campaign typically results in an end-of-year rally and you’re starting to see that today.”

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Food vs. Fuel: Corn Prices Plummet, Why No Grocery Relief?

Nick Chambers — Mon, 27 Oct 2008 18:30:59 +0000

In a new report, the Renewable Fuels Association (RFA) says the events of recent months clearly indicate that production of corn ethanol is not a major driving factor behind the continued high food prices at the supermarket.

In the report, “Will the Plunge in Grain Prices Mean Lower Food Prices at the Supermarket?,” the RFA points out that, while prices for agricultural staple commodities such as corn, wheat, and soybeans have all plummeted by about 50% in the last half year, food prices at the grocery store have remained highly elevated. At the same time, ethanol production has dramatically increased.

When the above factors are taken together, the link between grocery store food prices and corn ethanol production becomes dubious. Not only that, and also somewhat unintuitively, it seems that the diversion of relatively large portions of the US corn crop to ethanol production has very little effect on even the market price of corn.

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Ethanol Makers Losing Money Due to Hurricane Ike Damage and Rising Corn Prices

Nick Chambers — Mon, 22 Sep 2008 17:46:36 +0000

U.S. ethanol producers are being hit by a one-two punch: Hurricane Ike-related damage is softening demand for the alternative fuel while rising corn prices are increasing operating costs.

Last week, Hurricane Ike left many US oil refineries hobbled in its wake — including the nation’s largest biodiesel refinery. As a result, oil production is down.

Demand for ethanol in the US is closely tied to oil production because of the federal ethanol-gasoline blending mandate. So as oil production has fallen, so has ethanol demand.

At the same time as Hurricane Ike was downing oil refineries, corn futures — essentially the betting on whether or not the price of corn will rise or fall in the coming months — have risen dramatically due to the volatile financial markets and a general upward trend.

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Unintended Consequences and the Ethanol Deathwatch

Shirley Siluk Gregory — Tue, 06 May 2008 20:13:06 +0000

The U.S.’s rush to grow corn for fuel has already been blamed for rising food costs that are pricing the world’s poor into hunger and malnutrition. But the high cost of corn is having another unintended consequence: a plunge in biofuel plants’ profit margins.

About one-fourth of all corn grown in the U.S. is now cultivated for fuel rather than for food. Meanwhile, the growing demand for both food and fuel is driving commodity prices for crops like corn to record highs. That means, even with the federal government’s generous subsidies for ethanol production, today’s biofuel profits aren’t what they used to be.

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