The March 2015 corn futures traded to a high of $4.115 on Dec.15, the highest level since July 10 and 80 cents above the low reached on Oct. 1. The average spot cash price at South-Central Illinois elevators was reported at $3.785 on Dec. 12, $1.01 above the low on Oct. 1. University of Illinois ag economist Darrel Good cites increasing corn demand through ethanol and exports as the primary reason. Strengthening corn demand through ethanol and exports are primary goals of IL Corn.
“Domestic ethanol production during the first quarter of the marketing year was about 5 percent larger than in the same quarter last year, compared to the 0.3 percent increase for the year implied by the USDA forecast of corn consumption for ethanol production,” Good said. “Ethanol production remained large during very early December, reported at a record 290.5 million gallons for the week that ended Dec. 5. While a continuation of sharply lower crude oil and gasoline prices might eventually slow the pace of U.S. ethanol exports, domestic ethanol consumption will remain well supported and ethanol production is expected to remain large well into the second quarter of the corn marketing year,” he said.
How do we build corn ethanol demand and corn export demand?
On ethanol, both Illinois Corn Growers Association and the Illinois Corn Marketing Board are working to bring E15 to Chicago. If the so-called Chicago Clean with E15 ordinance passes, it would mean about 200 E15 pumps would be installed in the City. But that’s not all. It would mean that the first domino has fallen toward widespread acceptance of E15 and with it, increased corn demand.
On the export side of things, both corn organizations have worked hard on waterways infrastructure improvements. Through educational programs in Washington, DC, ICMB has helped more people understand the importance of the waterways. ICGA has lobbied heavily on this issue. The WRRDA act passed this year. And just recently, the U.S. House passed legislation that would approve the user fee that industry has accepted to help pay for improvements on locks and dams.