US corn prices correct, co-product prices also come down; Ethanol is one solution for two issues, high gasoline prices and Air Pollution

Corn prices in the US corrected this week leading to drop in FOB corn prices as well and co-product prices. July contract closed at $154.01/MT on Jun 01, 2018, down 3.65% from its earlier close of $159.83/MT on May 25, 2018. Sept corn was also down 3.52% to $157.63/MT and Dec down 3.13% to $162.04/MT. As on May 27, 97% of the corn was planted and 79% was rated as good to excellent and 72% has emerged and this is one reason for the prices to fall. The sowing is 2 percent higher than 5 year average. As per USDA report, the average temperature across the corn belt is going up, which could boost crop development, but it also reduced sub- soil moisture and the demand for irrigation was up.

US corn on FOB basis (US Gulf) was indicated at $183/MT (Jun) and $187/MT (Aug). FOB prices (PNW) were indicated higher at $200/MT. Argentine corn was indicated at $185-189/MT, Brazil at $186-190/MT and Ukrainian at $189/192/MT. US corn is still the cheapest corn available in the world.

Corn co-products, namely DDGS prices corrected on FOB basis (US Gulf) as corn prices were down and were indicated at $260/MT (June) and down to $249/MT (Aug). Prices in PONW were also down and indicated at $251/MT (June) and $248/Mt (Aug). The above prices are on bulk basis. Delivered prices for the period are yet to correct and in the indicative prices to Vietnam were at $275/MT; China $269/MT; Chittagong at $293/MT and Myanmar at $291/MT.

Ethanol prices on CBOT also were down, June $0.3963/lit; July 0.3910/Lit; Aug 0.3952/Lit; Sept 0.3979/Lit and Oct $0.3971/Lit. It must be borne that ethanol offers the cheapest Octane against the aromatics, which are priced at $0.78/Lit (Almost double the value) and their (Aromatics) removal from the gasoline processing will not only reduce the price of gasoline, but also lower the Air Pollution in the countries. The Octane requirement can be met by addition ethanol in gasoline. Ethanol upto 27% in gasoline does not harm the car engines and cane be used effectively as has been proven in Brazil. Even in US many states allow E30 (30% ethanol in gasoline) and it is the choice of the car owner to fill the car with E20 or E2, which E10 is bland mandate enforced all across the country.

Amit Sachdev, Serving Agriculture and Livestock in India, Bangladesh and Sri Lanka * E Mail: asachdev@grains.org

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