My comments: it is not surprising to see a large bank starting to fight back and point the finger at the U.S. ethanol industry. All banks are involved in commodity trading and feel the heat when prices rise. The truth is that rising corn prices are not down to one factor but many, including rising feed and meat demand from China and bad harvests. Of course the U.S. ethanol industry is a significant user of corn and sustained R&D efforts must lead to a rapid shift to cellulosic (or other non-food feedstocks), before other climatic events or large Chinese purchases make things even more difficult.
"Ethanol plants, not speculators, are behind the surge in corn prices", Commerzbank said, urging authorities seeking to calm markets to examine the state-subsidised biofuels industry.
"Ethanol plants, not speculators, are behind the surge in corn prices", Commerzbank said, urging authorities seeking to calm markets to examine the state-subsidised biofuels industry.
Speculators, whose net long position in Chicago corn has risen to its highest in more than two years, have had a role to play in the doubling of futures in the grain since late June.
"Financial investors are leaping on the bandwagon and fuelling the price increase," Commerzbank said. "But they are not the main reason for the rally. The state-supported increase of the ethanol blend in the US is a major reason for the rise of corn prices in our view.
"Those who believe the remedy for rising food prices lies in stronger regulation should also consider the role of biofuels in this regard," the bank added.
[......] Rabobank analysts, highlighting an "ethanol binge" on the grain, said that current rates of the production of the biofuel, at 900,000 barrels a day, "implies corn use in excess of 5bn bushels" for the crop year.
Analysts at US-based broker US Commodities added that, in seeking to curb consumption of corn in the face of tight stocks, "the logical place to cut use is the ethanol industry".
"We cannot afford to liquidate any more of the breeding herd," they added. US livestock farmers still consume, narrowly, more corn than ethanol producers.
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