Don’t Count Your Cobs Before They’re Grown

Corn growers are riding high these days, as ethanol moves into place as the default alternative fuel for automobiles. Lots of money is pouring into expanding both growing and refining capacity. But not all portents are positive:

Lurking behind [Archer Daniels Midland]’s gloomy news are doubts about the future of corn ethanol. A growing number of analysts, once bullish on the product, are warning that an oversupply may be coming as soon as this year. On Apr. 27, a Lehman Brothers report projected that production will outstrip demand in the second half of 2007, measuring the domestic thirst for corn ethanol at 420,000 barrels per day but supply at 445,000 barrels a day, mainly because the U.S. lacks the infrastructure to move the product to market.

Corn field

Could the nascent ethanol boom be quickly hurtling toward an ugly bust? Only Ceres knows for sure.