NASHVILLE, Tenn. (RFD-TV) — Record harvests are creating both opportunities and headaches for commodity crop growers this season.
Rail shipments are running strong, moving corn and wheat to Mexico and the Pacific Northwest, but low water levels on the Mississippi River are still causing barge traffic.
"Remember, this is also coming at a time when we don’t have as much demand, specifically from China for soybeans, and so that allows a little bit more of that space for barge freight to be used for corn and wheat. So, there are some opportunities there."
“The issue here that we’re experiencing on the Mississippi River is a situation that’s going to reduce some traffic there because of low water levels resulting from the dry conditions in the Midwest,” explained KC Sheperd with Oklahoma Farm Report. “Lower water levels on the Mississippi River mean less barge traffic. Remember, this is also coming at a time when we don’t have as much demand, specifically from China for soybeans, and so that allows a little bit more of that space for barge freight to be used for corn and wheat. So, there are some opportunities there.”
Grain Sorghum Sees Gains as Demand Shifts
While corn and wheat find buyers, grain sorghum is creating a new dynamic, with ethanol plants stepping in as demand shifts.
“Is that grain sorghum on the Plains has really eaten into demand for corn because grain sorghum has lost that Chinese bid for exports — basis on grain sorghum is extraordinarily cheap,” Sheperd explained. “And if you are an ethanol plant, there is some very affordable grain sorghum out there looking for a home. And so we’ve seen it show up with our customers at Gobank, and it’s showing up in the data where ethanol plants are using more and more grain sorghum and replacing that, using grain sorghum to replace corn. So yeah, there’s some opportunity here, I think, with E15 and with growing exports.”
He adds that with ethanol plants using more grain sorghum, it will be something for farmers to keep in mind next year while marketing their crops.
Ethanol production is on the rise, hitting a five-week high even as inventories dip.
Most of the gains came from the Gulf and East Coasts, while the Midwest saw a slight drop. Overall, stocks are at their lowest in a month, showing strong demand for the biofuel as farmers and processors work through this record harvest.
Global Demand for Bioethanol Booms
Bioethanol is gaining traction around the world, as countries look for more sustainable fuel options. According to Doug Berven, Vice President of Corporate Affairs at Poet, the U.S. is exporting record amounts of bioethanol, and other nations are following suit.
“Around the world, it’s interesting, because gasoline and diesel are still popular choices — but biofuels are coming on strong in many, many countries,” Berven said. “In fact, last year, we set a record in exports around the world, from the United States, of bioethanol. This year, we’re on pace to break that record again. So, you’ve got countries like Brazil, where their minimum blend rate of ethanol is E30 now. Thirty percent ethanol is the lowest blend rate you can get at a gas pump. It’s either 30% bioethanol or 100% bioethanol. Believe it, that’s their choice. There is no E10 or E15. It’s 30 or 100%. That’s where our country needs to go, and many other countries need to go.”
Berven says countries in Asia and North America are raising their blend rates, often using corn or maize as the primary source, noting that policy changes are driving these adoptions.
“Now, in India, they have just gone to an E20 blend rate nationwide,” Berven continued. “And interestingly, they have banned the use of sugarcane in the country to make ethanol, which is also a popular feedstock. If you make bioethanol out of sugarcane, you hinder the sugar market, so they’re banning sugarcane from being used and just using maize or corn in India. Canada is moving to E15 quickly. Japan is talking about E10 now. The EU, the UK, and Southern Asia are all moving to higher-blend rates of ethanol.”
Berven says bioethanol is becoming a global standard, with higher blend rates providing lower costs, cleaner fuels, and wider availability. All this good news also comes as international trade partners flood into Washington to attend this week’s Global Ethanol Summit — another step toward positive momentum for U.S. corn and sorghum growers.
U.S.-Mexico Trade Relationship on Corn Continues to Grow
Missouri Corn Growers’ CEO Bradley Schad joined a recent trade mission to Mexico to explore new opportunities for corn and ethanol exports, which he said was a successful trip.
“We had the opportunity to meet with industry stakeholders that buy our corn, so everybody from the livestock industry to sugar and ethanol producers, and the rail industry, just to get a lay of the land from where they stand,” Schad said. “Then started the next day, first thing in the morning, with government officials and talking to them about the importance that we feel for corn, and we were welcomed with open arms. They saw the benefit of trade just like we do.”
One major positive is that U.S. corn is continuing to find increasingly strong demand in Mexico.
“Mexico is our number one trading partner, and we are just building those relationships so we can continue selling more and more corn to them,” Schad said. “They continue to increase their purchases of corn, but we have some other opportunities through ethanol and distillers’ grains, as well, that will benefit them.”
Those face-to-face conversations seem to be paying off. Mexican officials say they’re planning to increase their ethanol blend rate by the end of the year.
“We want to do everything we can to increase that trade, and so building those relationships is important, and we have to meet with the Secretary of Agriculture as well as the Deputy Secretary of Energy, and so we talked about the opportunity to increase ethanol,” Schad continued. “And while we’re down there, President Sheinbaum of Mexico said, by the end of the year that they’re going to be looking to increase their ethanol blend rate in a briefing that they had -- so we’re looking forward to that strategy that they’re going to be working on, which is supposed to come out by the end of the year. So, exciting news while we were down there working on behalf of corn farmers.”
And while low Mississippi River levels are slowing grain movement in the U.S., shipping issues should be less troublesome for producers if they are heading South. Schad added that Mexican officials and rail companies signaled in their meeting with the American trade envoy that they plan to remove barriers that are limiting U.S. corn exports.
