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Column: Ethanol change drags corn lower

Breitinger

Among U.S. farmers, corn is king -- more acres of corn are planted each year than any other crop.

Yet very little of that corn is sweet corn that ends up directly on your plate. Nearly half of all domestic corn use is devoted to creating ethanol, a gasoline additive mandated by the Environmental Protection Agency.

Based on a law passed in 2007, the amount of corn-based ethanol produced next year was set to rise to 14.4 billion gallons. Rising ethanol production and corn consumption has been cited as a major factor in high corn prices during recent years, a welcome boost to farmers.

Other corn consumers, such as the livestock industry, which accounts for about 40 percent of domestic use, have criticized the ethanol mandate for its effect on corn prices.

Additionally, auto manufacturers have concerns about fuel containing more than 10 percent ethanol, which has essentially capped the amount of ethanol that can be used by drivers.

As a result of these concerns, the EPA reportedly proposed this week to cut the ethanol mandate to 13 billion gallons next year, a significant decrease.

Although the proposal has yet to be approved by the White House, corn prices plunged when the news hit the market, falling to $4.33 per bushel by Friday, the lowest price in more than three years.

Gold clobbered as debt-ceiling talks resume

Gold prices were clobbered late this week as news emerged that Republican leaders were meeting with President Barack Obama to discuss solutions that would lead to a short-term extension of the government’s borrowing authority.

As a result of the talks, investors decided it was less likely there would be a “debt ceiling” crisis or potential U.S. credit default, which caused them to sell gold they had been holding as an insurance policy against a potential crisis.

By Friday, gold had fallen to less than $1,260 per ounce, the lowest price in three months.

Sugar prices move higher

Sugar prices rose to a six-month high this week, reaching 18.88 cents per pound on Friday.

The move comes on the heels of reports that Brazil, the world’s largest sugar producer, could have a shortfall this year because of heavy rains preventing sugarcane harvest.

Meanwhile, the U.S. sugar market has been getting a boost recently as the government has stepped in and purchased excess domestic supply.

U,S, sugar comes both from southern sugarcane producers, such as Florida, and also from northern sugar beet producers that stretch from Michigan to Idaho.

Walt Breitinger is a commodity futures broker in Valparaiso. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

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