Corn could reach $6.50 a bushel by 2025 according to a recent study by the Department of Energy. The “25 by 25” Senate proposal, if enacted, could push corn ethanol production up to 25 billion gallons by 2025, resulting in the high corn price, the study predicts.
Under the proposed mandate, the projected level of about 25 billion gallons of corn ethanol production in 2025 would significantly increase U.S. corn demand. The Senate proposal also would have a significant impact on food and feed markets according to the study, and lead to a cut, or elimination, of U.S. corn exports.
The study points out that impacts of these rising corn prices on the prices of other food and feed products — and ultimately on U.S. economic growth — is highly uncertain but potentially larger than the direct energy price impacts alone.
The study also predicts that the “25 by 25” policy will result in dramatic increases in consumption of biofuels and reduced consumption of petroleum-based fuels. To meet the renewable fuel standard requirements, it will take nearly four times the amount of fuel from renewable sources than is used today.
The study was conducted at the request of Sen. James Inhofe (R-OK) for analysis of the “25-by-25” proposal that combines a requirement that a 25 percent share of electricity sales be produced from renewable sources by 2025 with a requirement that a 25–percent share of liquid motor transportation fuel sales also be derived from renewable sources by 2025.
To view this study in its entirety, click here.
For more information on this topic, go to www.balancedfoodandfuel.org.
Source: American Meat Institute