Morgan Stanley Says Policy Changes Won’t Hurt Ethanol Demand
by Whitney McFerron (Bloomberg BusinesssWeek) Potential changes in a U.S. government mandate for ethanol are unlikely to “materially impact” demand for the gasoline additive made from corn, Morgan Stanley said.
Livestock producers and some U.S. lawmakers have asked President Barack Obama’s administration to cut a requirement that refiners use ethanol, after drought spurred corn prices to surge to a record last month. Blenders are unlikely to stop using ethanol even if the mandate is scrapped, because the fuel additive is trading at a discount to gasoline, Morgan Stanley analysts including Vincent Andrews and Hussein Allidina wrote in an e-mailed report today.
“Economics, not politics, drives ethanol use,” Andrews and Allidina wrote. “Other than an outright ban on ethanol use, we do not believe that any policy change will materially impact ethanol demand, and therefore corn prices.” READ MORE and MORE and MORE (Reuters)
Excerpts from Reuters: ”Food crop demand for biofuels, particularly in the United States and European Union must be cut substantially, as should mandates for ethanol content in fuel, to help relieve the pressures on both domestic and global food markets,” (Shenggen) Fan (director general of the International Food Policy Research Institute) said in a release.
…World food prices fell for the past three months and are 15.4 percent below the record set in February 2011 on a price index calculated by the U.N. Food and Agriculture Organization. READ MORE