energy.agwired.com

Here we go again – feast or famine time. Reuters is reporting that there could be a “looming glut” of ethanol ahead. Just a month ago we couldn’t produce enough.

I especially like the fact that this story is based on the predictions of one person, Fimat Energy analyst Antoine Halff, who says, “Surging capacity … poses daunting challenges for the ethanol industry, including heightened competition for feedstock and the logistical headache and costs of shipping ethanol from the Midwest to the main gasoline markets.”

Halff predicts that by the end of 2008, ethanol production capacity in the Midwest will be sufficient to replace 25 percent of Midwestern gasoline demand and he suggests that the solution to the problem will likely be the wider adoption of E85.

Sounds like good news to me.

It should come as no surprise that demand for ethanol is setting records this year.

The Renewable Fuels Association just announced the lastest available statistics to confirm that. According to RFA, May ethanol demand set a record at 349,000 barrels per day. That’s well ahead of May’s production figure of 293,000 barrels per day.

Ethanol imports were down in May from April, according to RFA President Bob Dinneen. “The decline in imports from April to May explains much of the ‘distressed’ situation we have seen in the spot market for ethanol in recent weeks,” said Dinneen. “Imports from countries like Brazil were late arriving and caused some to become unnecessarily nervous about ethanol supplies. Fortunately, the U.S. ethanol industry has grown and continues to grow at a pace sufficient to meet surging demand for this cleaner-burning, domestically-produced renewable fuel.”

Bunge North America and Southwest Iowa Renewable Energy have announced plans to build and operate a 110-million gallon per year ethanol production facility near Council Bluffs, Iowa, according to a company release.

Southwest Iowa Renewable Energy, LLC (SIRE) is an entity primarily owned by farmers in Southwest Iowa that was formed in 2005 for the purpose of developing and operating the proposed plant. On Saturday, SIRE formally closed a successful investment round to provide equity for the project. Under the agreement, SIRE’s farmer members would hold the majority of shares while Bunge would be the largest single shareholder. Bunge would market the by-products and provide other key services for the new facility. AGRI-Bunge, LLC, a joint venture between Bunge and AGRI Industries, an Iowa cooperative, would be responsible for grain origination to support plant operations.

The food versus fuel debate is more of a feed versus fuel debate when it comes to corn and ethanol, since about half of our corn is fed to livestock. So, what does the livestock sector think about it?

Some are making a big deal about a recent article in Pork Magazine in which Gary Allee, University of Missouri swine nutritionist says he believes that “ethanol producers will out bid pork and poultry producers, driving up corn prices.” The article says that Allee and others are researching ways to use the ethanol by-product, distiller’s dried grains with solubles or DDGS, in swine diets. But there are some challenges in the performance value of that feed for hogs and whether they will eat it. The bottom line of the story is that “there will surely be some growing pains as the corn and livestock sectors re-adjust to changes that lie ahead.”

On the cattle side, there is an Associated Press story out of Iowa that says cattle producers think ethanol industry can boost beef production. The director of the Iowa Beef Center at Iowa State University thinks that because Iowa is such a major ethanol producing state that “the availability of distillers dried grains and other ethanol extras will give the state competitive advantage over other cattle-feeding states.”

Livestock have different feed requirements, but there is constant on-going research to address those needs in various forms.