Tamale Gate or Ethanol Heating Up Controversy

Tamale prices in El Paso, TX increased a Dollar from $11.00 to $12.00 per dozen. This price hike is due to Ethanol Production causing the increase in corn prices and higher transportation costs.

Meanwhile the Ethanol plants are struggling. The Canton IL Ethanol plant filling for Bankruptcy and some of the others scheduled to start to build have been put on hold. Is Ethanol the fuel of choice for the future.

We have seen the the first plants that got online before the run up of corn prices make a large return on their initial investments. Many have sold out from their original Farmer owner base as investors saw this as an opportunity to cash in on this market. As the price of Corn has risen we are seeing a change in the scenery. We are seeing the plants looking at sales of the other product of production as a source of revenue. That component is Dried Distillers Grain if the plant has a drier complex. If not we are seeing the wet mash sold as cattle feed domestically. The Dried Distillers grain with a 24% protein level is an attractive feed source in many foreign countries. This product is one of the major new exports lowering our balance of trade deficit. We are bringing in Electronics and sending out Dried Distillers grain and other ag commodities.

We have seen the oil independence of Brazil with the use of Ethanol for fuel for their autos. What is the difference here in the U.S.? Brazil has an Ethanol Advantage. The fuel source for Ethanol is Sugar Cane. To make ethanol Sugar Cane is a fantastic crop. The Sugars are easily broken down into making Ethanol. It is a very efficient crop for this process.

In the Corn based Ethanol process the margins are thin due to the high cost of inputs. The energy to process the grain is large and the cost of grain is increasing at an ever expanding rate. The Canton Plant was going to use a coal mixture for energy to process the Ethanol. Most all the others use Natural gas and Oil for processing.

One Ethanol plant coming on line in the near future is a BioMass plant in Soperton GA. This will not use Corn but will use alternative sources for the simple sugars required to make the Alcohol. This will be an interesting plant to see how economically it can produce Ethanol. And the associated new crop structure to support this plant.

It will be an interesting year to see what breaks out in this market. The Bush Energy bill calls for an increase use in BioFuels. It will be interesting to see if the cost factors will allow this industry to prosper.