This is part of a recent MarketOracle report and concerns the production of Ethanol and implications regarding Solar Cycle 24......
With the recent flooding the percent of the U.S. corn crop that is expected to be used for ethanol production is estimated by some analysts to increase from 25-30% of the crop to nearly 50% due to the contractual commitments of the ethanol producers - a situation that would be untenable politically and economically.
The actual percent utilized by the biofuel sector will depend on the U.S.D.A. damage assessment which should be issued in late July. Keep in mind a healthy corn crop would be at least knee high by now, but many fields remain flooded and corn growth remains stunted.
We were interviewed on CNN radio last month on the state of the agricultural and biofuels markets after the flooding. We remain convinced that corn production will decrease substantially this year in the U.S. due to the reduced acreage planted for that crop, the flooding, and the reduced yields expected due to sub-optimal growing conditions.
Sunspot activity, discussed last month, has not increased as we proceed further into the new solar cycle. Only one sunspot was visible earlier this week. Historically we should be seeing dozens. Some commentators such as Donald Coxe point out that such a low level of solar activity may point to climate change issues – and he claims this most likely would be a cooling not a global warming event.
We remain fully invested in the energy and agricultural sector, and would add to our positions on any price weakness.
By Joseph Dancy,
Adjunct Professor: Oil & Gas Law, SMU School of Law
Advisor, LSGI Market Letter
Energy Resources Bull Market Remains Intact