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SC Iowa | first off---traveling in Ohio and south to Smokey Mtns. so may not be able to respond very quickly
I sense a lot of fear about the rfs being changed or waived.....and other than a quick knee jerk reaction I do not view that as the most serious threat....after all, ethanol use has become inbedded into our fuel supply and the industry is creating the lower octane gas that requires a high octane component to reach the 87 level required for sale at the pump...
To me, the more serious threat ethanol would face in the coming 12-14 months would be a policy shift that put an upper limit on the percentage of ethanol that could be blended per gallon......the reason that is much different than waiving the mandate is that you would now know the maximum consumption possible, whereas with the change of the mandate, you do not know if blenders would do anything other than just continuing to use ethanol for it's cheap octane attribute....
So, why would the govt put a limit on the amount of ethanol in gas? Likely as a result of reaching some critical point in time and figuring out that demand is not being cut as much as expected/needed.......same thing happened in 1995/1996 when each quarterly grain stocks report showed less corn on hand than projected since demand was not being cut......the most likely report to suggest action would be the March 30 report showing stocks as of March 1....that would give 5 months to do something to slow corn for ethanol usage........depending on how soon after Jan 1 that something like this is possible, the path to lower ethanol in gas could be a glide path or a crash landing.......I could envision a stairstep month by month reduction from 10% to 6-8% that gives the industry some time to adjust over 2-4 months....then we get to see how things look for the 2013 corn crop..
there are always unintended consquences to consider.......what if US ethanol prices fall and creates export demand?? Always something...
Odds of this kind of policy shift happening?? Less than 20%.....
Harvest is here, or will be very shortly......be careful out there.....I am calling this the "hurry up and wait corn harvest" as aflatoxin and waiting on crop insurance adjusters could really slow things down for some folks......plan ahead for the contingencies you may need to get to the end safely and without blowing a gasket!
Ray J
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what you do need to be worrying about
