Indiana Economist: Ethanol Vital To Corn Market

Tom J Bechman tbechman@farmprogress.com
July 2, 2007

Participants at the 2007 Indiana Farm management Tour who visited the stop at Clunette Elevator in Clunette heard Chris Hurt talk quite a bit about the importance of ethanol to the corn market, both in the U.S., and particularly in Indiana. Hurt is a Purdue University ag economist who is following the ethanol situation closely.

There are nearly 40 plants on the list, with the state map dotted with potential plants, Hurt notes. However, he's already aware of some on his list that aren't likely to be built. But everywhere he goes, he hears of others rumored to be in some stage of formation.

Right now, there are 10 to 12 that are under construction or close to beginning construction. That could have a big impact on the Indiana corn market in '08, Hurt says. It will mean paying close attention to demand on the '08 crop as things shape up.

Weather from here on out will likely be the major factor in what happens to corn prices for the '07 crop, he notes. But the demand for ethanol as more plants open up will become more apparent in '08. New plants are also being built or planned in other Midwestern states, not just here in Indiana.

What Indiana has done is come from nearly nowhere, with one plant, New Energy at South Bend, to a leadership position in biofuels in three years, says Becky Skillman, Lt, Governor and Secretary of Agriculture, interviewed recently ion WIBC radio in Indianapolis. She notes that state government is trying to stay one step ahead, and is now shifting incentives for new plants to those that would utilize some form of cellulose to make ethanol. Cellulose products used as ingredients could include corn stalks, switchgrass, wood chips and a whole host of other possibilities.

Indiana Praire Farmer, July