Today in Biofuels: Soaring corn, soy prices predicted by Goldman; Thailand debuts E20; B20 gelling issues in Washington state

Top Story:

Goldman Sachs predicted that soybean prices will reach $14.50 per bushel and corn will increase to $5.30 per bushel by December 2008, and recommended that its clients buy corn and sell wheat. Christopher Wyke, product manager at Schroders, told Bloomberg that “prices are historically cheap” and that the rally in agriculture could last for 20 years. When adjusted for inflation, corn costs $2 per bushel compared to $7.80 in 1974.

Producer News:

In Florida, observers are speculating that FPL Energy will shortly announce a 4 Mgy cellulosic ethanol plant at the US Sugar facility in Hendry County. The plant would use citrus waste as a feedstock.

In New York, Empire Green Biofuels expects to break ground on plant construction this spring. The proposed ethanol and steam-producing plant would cost $185 million. Plant capacity and feedstocks were not disclosed.

International News:

In India, the Bureau of Indian Standards will release its E10 specification in March 2008, but moneycontrol.com reports that Indian oil companies are “unlikely” to have an adequate supply of ethanol for the October 2008 transition to E10. In addition, it is unclear if and when automakers Maruti Suzuki and Hyundai will have ethanol-capable engines.

In Thailand, PTT and Bang Chak Petroleum began selling E20 at 10 PTT stations and five Bang Chak Petroleum stations in Bangkok.  Bang Chak plans to increasing the number of outlets to 20 in February. The retail price of E20 is at an 18 percent discount to gasoline. Currently, only the Ford Focus car can run on  E20 but other makes and models are expected to be available this year. while other models require engine adjustments.

In Argentina, a restriction on beef exports aimed at reducing local beef prices has, instead, led to a conversion of 10 percent of Argentine ranchlands to soybean production. Soybean is not subject to export or price controls and 50 percent of all cultivated land in Argentina is used to grow soybeans. 90 percent of the crop is exported.

In Australia, BioWorks will produce 800,000 gallons of biodiesel from Indian mustard, canola,  tallow and palm oil. The Indian mustard crop is being grown at nine farms in Pingelly, Western Australia  which have converted from canola cultivation owing to mustard’s better yields in drier areas.

Research News:

A new study by the International Food Policy Research Institute, “The World Food Situation: New Driving Forces and Required Actions” said that, based on existing and announced biofuel plant capacity, corn prices would increase by 26 percent and oil seed prices would rise by 18 per cent by 2009. In a second scenario, based on doubling planned capacity, corn prices would increase by 72 per cent and oil seeds by 44 per cent. The Institute said that either scenario would result in less food availability and calorie intake globally, with the most acute effects felt in in Sub-Saharan Africa.

Policy and Policymakers:

Winners in the Biofuels Digest Medal for Highest Achievement in Biofuels in 2007 of the Year, a distinction voted by the Biofuels Digest Editorial Board: The gold medal was awarded to Don Endres, CEO of VeraSun Energy. The Silver Medal was awarded to Luiz Inácio Lula da Silva, President of Brazil. Bronze medals were awarded to: George W. Bush, President, United States; Elliott Mannis, CEO, D1 Oils; Vinod Khosla, venture capitalist; Bob Dineen, President, Renewable Fuels Association; Jeff Broin, CEO, Poet; Al Gore, Nobel Laureate; Dr. Chris Somerville, scientist, University of California; and Ban Ki-moon, Secretary-General, United Nations

Consumer and Fleet News:

In Washington state, C-Tran, the Clark County transit service, has switched to B5 from B20 due to gelling issues experienced with B20 when temperatures fell into the 30s. C0-Trans fleet was unable to fully burn the fuel as a result and experienced power losses.

In Florida, the city of DeLand said that it aims to convert from B5 to B20 in summer 2008. The city converted from B2 to B5 in November.

Financial News:

The Biofuels Digest Indexâ„¢ (BDI), a basket of public biofuels stocks, was unchanged yesterday as US markets closed in observation of the New Year’s holiday. On Tuesday, the BDI fell 1.17 percent to 134.23 as investors took profits at year end. Losers led winners by a slight margin.

Among diversified agribusiness, The Andersons (ANDE) fell 1.62 percent to close at $44.80, while Pacific Ethanol fell 4.65 percent to $8.21 as investors reigned in the recovering ethanol pureplay. Among small caps, GreenShift (GSHF.OB) gained 15.79 percent to close at $0.022 after providing a positive restructuring update to the markets.

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