KEMPTVILLE — When and if electric vehicles seriously displace conventional cars and trucks, North American corn growers — like oil companies — will have to throttle back production.
Grain merchandiser and cash-cropper Steve Kell warned of that possibility during his presentation at the annual Eastern Ontario Crop Conference in January. Kell noted that 30 % of Ontario corn production is turned into ethanol, which has been blended into most gasoline since the renewable fuel policy came into effect in 2008. That’s about the same crop percentage as in the U.S. “So you can see how important ethanol has become in terms of total corn usage, certainly for Ontario,” Simcoe-based Kell said.
Noted Kell, “One of the things we need to think about, moving forward, is electric cars don’t use ethanol, right? So at some point … we’re going to have to figure out how to bring corn (production) back down to the sort of volumes we had in 2001 or 2002, or corn is going to get really cheap, or we’re going to have to learn to export more.
Kell anticipates that Ontario farmers will grow less corn, more of other crops, and figure out how to export more corn. He advised his audience to “watch for change in the marketplace” because ethanol’s current share of corn production is too big to ignore.
The situation is different for soybeans. ING Bank reported that in the U.S. 90 % of biofuel is corn-based ethanol but only 3 % is soybean-based biodiesel. Meantime, American soybean exports have declined as more of the crop is consumed by domestic crushing plants, with U.S. biodiesel policy driving this “phenomenal” crush level, according to Kell.
The increased sales of electric vehicles over the last few years hasn’t stopped the growth in gasoline consumption, and the rising amount of corn ethanol consumed as a blended part of that gasoline shows that cars with tailpipes remain king of the road. “The week before Christmas, the United States set a record for the most ethanol ever produced in a single week,” Kell said. “So Tesla has yet to corner the market. That’s good in a big crop year that we’ve got excellent demand for fuel. That’s going to be really important for this crop year.”
American farmers produced a record 15.3 billion acres of corn in 2023, which helped to drive prices down from the higher levels seen in the 2022 and 2021 crop years. Kell advised his audience with remaining corn to think of $230 or $240 per tonne as a reasonable price to lock in, while “$300 is not a reasonable place to set targets if you’re budgeting for next year.”
Source : Farmersforum