NASHVILLE, TENN. (RFD NEWS) — Farmers across the country are looking for ways to market a glut of corn right now and tackle business planning for the growing season ahead. The Nebraska Farm Bureau (NEFB) President, Mark McHargue tells RFD NEWS he is in talks with officials across the pond to capitalize on demand for U.S. ethanol.
“In Nebraska, we do have a carbon pipeline now that’s functioning and running,” McHargue explains. “All of our ethanol plants are major ethanol plants. Can produce ethanol at a very, very low carbon score, and that’s important primarily to our export markets. I had a conversation with leadership from the UK while I was at the [AFBF] Convention. They’re still very excited about potentially buying SAF [Sustainable Aviation Fuel] from this country, upping their ethanol usage, and they certainly still want that low-carbon fuel.”
Next door in Iowa, Secretary of Agriculture Mike Naig tells RFD NEWS grain producers in his state are also hoping to see ethanol come to the rescue. Naig told RFD NEWS that year-round sales of E15 would be the ideal market for many growers in his state.
“I know they want to get this done, and the wheels of Congress just broadly have been so slowly grinding,” Naig said in a recent interview with RFD NEWS. “We need to move some things that are important. Look, timing’s everything. Let’s use this most recent crop report as maybe the final signal that we need to push this thing through, because it actually can have a dramatic impact, both for the farm community — and look, in Iowa, where Iowa consumers are saving $40,000,000 a year, just last year, in using E15 versus 10% ethanol blend.”
U.S. Auto Makers Push Back on Flex-Fuel Vehicle (FFVs) Production
Regular gasoline blends contain up to 10 percent ethanol, E15 uses 15 percent, and so on. On the other hand, FFVs can use ethanol blends up to 85 percent. While higher ethanol blends are available, most vehicles produced and sold in the U.S. cannot run on them. Markets analyst Chris Swift told RFD NEWS that U.S. manufacturers need to start adapting before it is too late.
“We really need our automobile manufacturers to be able to increase that engine or be able to warranty it to be able to handle that higher [blend],” Swift explains. “And we noticed that when we got into the flex fuel a couple of years ago, most of those vehicles now can’t be found anywhere. So, we really need the help of the automotive manufacturers to be able to increase that engine performance with that higher ethanol production.”
General Motors faced a class-action lawsuit in 2022 over those vehicles, with users claiming that the high-ethanol blend damaged their engines. That case was dismissed, but other parts of the suit are still working their way through the courts. However, the issue is not a matter of developing the technology. These FFVs are already produced by Chinese manufacturers like BYD and sold globally. However, Chinese EVs and FFVs are extremely rare in the United States due to steep tariffs, national security restrictions on connected vehicle tech, and a lack of established dealerships, making direct import complex and costly.
Expanding Domestic Ethanol Production
The ethanol industry is expected to expand this year. Broker Sherman Newlin tells RFD NEWS that when everything comes online, it could be positive news for corn growers.
“We’re supposed to be building out about another billion gallons worth of production, just plants expanding because of our tax credits that are available out there. And everybody’s trying to grind as much as they can. So, if all that could come online within the next year or so, or maybe a little bit longer than that, I mean, another billion gallons of ethanol produced could use up to another 300 million bushels of corn.”
Brazil’s ethanol industry is also expanding this year. Newlin says the South American trade giant currently operates about two dozen plants right now and could expand to as many as 40 within the next few years.
Corn Groups Push for Input Cost Reductions and USMCA
As farmers plan for the upcoming growing season, many are monitoring geopolitical factors and potential impacts on input and commodity prices. Lewis Williamson with HTS Commodities joined us on Tuesday’s Market Day Report to provide his market outlook.
In his interview with RFD NEWS, Williamson discussed what he is watching in today’s market during the first weeks of the year. He also shared his outlook for the upcoming growing season and the factors he anticipates influencing planting decisions and market conditions.
As row crop farmers prepare for spring planting, economists at the nation’s largest corn group, the National Corn Growers Association (NCGA), say it will be important to watch geopolitical developments, especially regarding fertilizer.
“It’s a relatively big chunk of the operating costs,” explains NCGA Chief Economist Krista Swanson in a recent interview with RFD NEWS. “It usually makes up about 35% of operating costs. And, you know, it’s kind of the most volatile of the input costs. And so even some small swings and fertilizer prices can have big implications for farm profitability, which is a big deal when we are in this profitability string that we’re in right now, where costs have been higher than prices the last few years.”
Fertilizer prices are a mixed bag lately. Analysts at DTN found that five of the eight major types had become more expensive recently, while DAP and MAP both fell by less than 10 percent. All eight types are more expensive than this time last year, with UAN 32 up 27 percent year over year.
NGCA is also paying close attention to recent comments on the US-Mexico-Canada Agreement (USMCA), the trade pact that President Trump called “irrelevant.” Swanson says they will be pushing to keep that agreement in place.
“About 40% of our corn exports go to Mexico, and about 40% of our ethanol exports go to Canada,” Swanson said. “So collectively thinking about corn and ethanol, important markets. And these were already important markets before USMCA, but they have grown in importance and market share since then. So, I think that speaks to the testament of the importance of this.”
USMCA is set for review this summer, but recent comments from President Trump are now calling that into question. In addition to calling it “irrelevant,” he claims that Canada gets more out of the agreement than America does. If the review is not successful this summer, the trade pact could sunset in 2036.
