The U.S. government is unlikely to bow to pressure for a waiver on quotas requiring a proportion of corn is used to make ethanol before November, at the earliest, traders said, despite the expected slump in global corn production due to severe drought.
And any change in the Renewable Fuels Standard, requiring that over a third of the corn crop is made into fuel ethanol, could cause market chaos after dwindling corn stocks had already been priced in, traders at an Australian grains conference said.
The earliest the mandate might be removed would be after the U.S. elections in November, Peter Nessler, president of commodities trading firm FCStone LLC said.
But the impact of any change would be market volatility.
“They could wave a wand, which they could in theory, and they say it goes away,” said Nessler.
“But then you take a shift of literally having no corn and 3 or 4 billion extra bushels of corn, and then you take the prices completely the other way, and that’s not fair,” he added.
Yeah, well, it’s not really fair having people pay for the food-burning boondoggle either.