Economy Of Corn

Economy of Corn

The headline I saw is: "Ethanol Demand Boosts Corn Planting [biz.yahoo.com] - An encouraging sign for Outdoor Corn-Fired Boiler manufacturers.

Here’s why I think this is a good thing for EZBurn Manufacturing.

Even at today’s peak prices, heating with Corn is less expensive per BTU than heating with propane. Using Google as my librarian, it's hard to pin down the number of BTUs produced by burning a bushel of corn. Part of the problem is because the efficiency of the burning device will produce wide variation in the amount of BTUs produced by burning a bushel of corn.

The winter of 2005-2006 saw an increase in natural gas prices brought on by unusually hot weather that increased the demand for natural gas-fired electricity generation in the summer. This price spike was further exacerbated in the fall when multiple hurricanes shut down domestic production sources for months – at times eliminating more than 20 percent of the nation’s daily domestic supply.

The resulting surge in demand for alternative-fueled heating sources produced shortages of these devices. Across the country, dealers who sell wood and corn stoves ran out of stock and had customers waiting for backordered stoves.

This experience produced a reciprocating increase in orders for such devices the following year, the season of 2006-2007. Dealers increased their inventory to be able to handle the perceived increase in demand. Unfortunately for many of them, the increased demand didn't hold into the next season, probably because the price of corn rose.

For years, the price of corn had hovered in the $2 bushel range. Corn had been stuck at around $2 a bushel for years before the ethanol boom lifted prices. In May of 2007 - Corn for May, 2007 delivery was trading at $3.74. Corn prices actually peaked at $4.50 bushel on Feb. 26, a 10 year high.

Agriculture industry analyst David Driscoll, of Citigroup Research, said in a report to investors that he expects increased corn planting to cause the price of corn to fall to about $3 a bushel by December, 2007.

More corn planted and available for purchase at a lower cost per bushel – that’s of benefit to the industry. Although it’s not getting any easier to say what the savings are to the consumer – it’s obvious that the more efficient your corn burning device is, the better your savings are.