Lets talk a little about ethanol this morning. According to the RFS website, the US has the capacity (or is building/ expanding) to the point where we will be able to produce about 13.8 byn gallons of ethanol. Most folks in the corn industry think that with ‘average’ weather and current genetics that we should be able to hit 15 byn gallons without ‘pinching’ the market too bad…but the S&D’s are so tight that any production problem will almost certainly translate into upward market volatility. So how do we get to 36 byn gallons? If/ when cellulosic process becomes economic (warning this will require much higher energy prices than we have today, or some sort of gee whiz technology we don’t have right now)…it would STILL require the building of 800 25 myn gallon plants! PLUS the logistics involved are absolutely STAGGERING! What this means to land prices is amazing, and analysts are already wondering what a "real estate" bubble in farm country would look like. Farm ground in Iowa is up 50% in the last 3 years, up over 100% since 2000, with values closing in on $4000/ acre.

Inspections report were steady/ strong, but not exceptional. Currently wheat sales are running 162% of last years pace. So with all the news the market was called higher, but the actual exceeded the expectations with wheats up 30, beans up 40, and corn up 10-12. A version of the FARM BILL did manage to make it through Congress, but it is still NOT WTO compliant.