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Politics : Politics for Pros- moderated
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To: Katelew who wrote (413291)2/26/2011 3:53:40 PM
From: Brumar89  Read Replies (3) of 794176
 
Atributing price movements to underlying causes involves a lot of guesswork. But ....

Biofuels aren't big enough? About 40% of the US corn crop going for ethanol sounds pretty big. And this affects more than just corn because corn is a livestock feed and because of acreage diversions to corn. Furthermore consider that markets are future-oriented and should be expected to move in advance of events. Events like the switch from E10 to E15. E15 will eventually raise the amount of ethanol used for fuel in the US by 50%. In regard to the last 6 months, though its not on the market yet, E15 was approved by the EPA for newer cars in October, a decision that had been anticipated for some time ... Obama and the Democratic Congressional leadership had been proposing E15 since early 2009.

There's a legitimate reason for a futures market in ag commodities .... producers and suppliers can use it to lock in prices and reduce price risk for themselves. So to do what I think you'd like, you'd need to somehow restrict parties not in the business from buying/selling agricultural commodity futures and I don't know who you'd do that.

Then we could let the politicians and regulators figure out whether ethanol is an industrial or agricultural commodity.
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