Are traders backing the wrong horse in the grain markets? Corn and soybeans are rallying strongly in part because of expected extra demand coming from the production of bio-fuels. At the moment the main focus is on corn and the corn grain ethanol produced from it. However, a recent article in The Technology Review refers to research that shows that the net energy gain from corn grain ethanol after taking into account all the energy used in farming and processing corn is small. The net energy gain from biodiesel made from soybeans on the other hand is much greater and biodiesel produces less greenhouse gases to boot. A possible catalyst for the switch of attention from corn to soybeans could be an article mentioned today in the Fort Dodge Messenger about a local trucking company embarking on a two year study comparing biodiesel to normal diesel in every day commercial use. This and the increasing spread of soybean rust seems to augur well for continued soybean price strength in absolute and possibly relative terms.


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