The Wednesday HOT TAKE

December 4

Ten HOT Nuggets

10 | Ten incredible decades of change

Over the past 100 years, U.S. corn production has increased more than 700% while planted area has decreased 10%.

Unfortunately, corn ethanol gets around a 20 point carbon intensity ding for ‘land use change’ as the Department of Energy, Argonne, California Air Resources Board, and the Department of Treasury see it…

…the only change I see is a 715% increase in production - with less land in use.

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9 | One-in-three

For the last seventeen years, more than one in every three bushels of U.S. corn has been used in ethanol production.

8 | Why ethanol matters

#1: Ethanol has provided long-term support to corn futures.

#2: Most notably at the farm level, ethanol has transformed basis across a large swath of the Corn Belt.

Take Iowa, for instance, producing an estimated 2.6 billion bushels of corn this year, 1.4 billion of which will go into ethanol production.

That is more than 50% of the largest corn-producing state’s crop dependent upon biofuel demand.

Imagine what basis would look like if you started stripping that demand away…

Ethanol plant locations (source: RFA):

3) Lastly, the ethanol industry contributed $54 billion to GDP, supporting more than 72,400 jobs directly and an additional 322,000 jobs indirectly in 2023.

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7 | A painful reality

(this is the point I lose a few subscribers because let’s face it - the truth hurts)

With an average annual growth rate in planted area of 5% EACH YEAR for the past 20+ years… Brazil has been running us over for a while now.

At 169mmt (6.2bbu), their 24/25 production is set to be 45% larger than the U.S.

Over the past ten years, Brazilian production has increased 77% while the U.S. has seen a mere 13% gain.

Worse yet, since 2000, Brazil’s soybean production has ballooned by 330% while U.S. production has only grown 60%.

This marked increase in production has catapulted Brazil to the leading soy producer and exporter in the world - as the United States’ expense.

Fun fact: Brazil’s soy harvested area increased 240% over the past 25 years while U.S. soy area increased a mere 18% (total row crop area has actually declined since 2000).

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6 | Good news/bad news

The good news is U.S. soy crush is set to hit its fourth consecutive record high in a row in 2024/25…