There is a new addition was made to Macon County's supply of fuel alternative. Morgan Distributing added a new 24 hour fuel pump that has E85. The ribbon cutting brought leaders in agriculture as well as the Illinois Legislature and Illinois Senate. E85 has 85% ethanol and 15% gasoline in the fuel mixture. E85 has been around for 20 years, but now the price at the time this article was written was $1.65 as compared to $2.09 for regular unleaded gasoline. A savings of 44 cents a gallon is a large enough saving to get your attention.

The attention has generated a large number of calls to the State of Illinois Environmental Protection Agency and a large number of hits on their web site www.illinoisgreenfleets.org . The reason for all the questions is that all vehicles can not run on E85. However, the web site has information on how to read the Vehicle Identification Number (or VIN) on your vehicle. The identification number can tell you if your vehicle is E85 compatible.

According to the National Ethanol Vehicle Coalition web site, here is a list of the manufacturers and key parts of the Vehicle Identification Number. Only selected vehicles have these numbers.

* This information is the most accurate information available to the NEVC.

ALWAYS CHECK WITH YOUR DEALER FIRST AND HAVE THEM CONFIRM THAT A VEHICLE IS E85 COMPATIBLE!!!!

The price is the good news the not so good new is the miles per gallon may be less. So when you look at the economics look at the price of gasoline compared to E85 as well as the difference in miles per gallon. A great place to compare government estimates of fuel economy is www.fueleconomy.gov . The web site allows you to compare the government's estimates of E85.

Other reasons for using E85: It is cleaner burning creating less air pollution. The American Lung Association has actively come out in support of the use of E85 as a better fuel to reduce air pollution in our cities and towns. Also the Illinois EPA has embraced E85 clean burning idea.

E85 can lessen the dependence on foreign oil. The United States demand for energy continues to grow and with that the need to import foreign oil. The raw product that is used to produce ethanol is grown in the United States. Each gallon of ethanol replaces a gallon of gasoline refined from oil. Each bushel of corn produces approximately 2.5 gallons of ethanol and a number of usable by products.

On May 12, the USDA released the first projections of supply, consumption, stocks, and average price for the 2005-06 corn and soybean marketing years. These projections provide a starting point for evaluating supply and demand developments as they unfold over the next year.

The first projections for the 2005-06 U.S. corn marketing year were a bit negative for price prospects. Using the March corn planting intentions and an average yield about 2 percent above trend value, the 2005 crop is projected at 10.985 billion bushels. That projection is 822 million smaller than the 2004 crop, but 425 million larger than the expected level of consumption during the current marketing year. For the year ahead, the USDA projects a very modest 110 million bushel increase in consumption of U.S. corn. Feed and residual use is expected to decline by 150 million bushels due to increased use of non-grain feed ingredients and to a decline in "residual" use from the high level of the current year. Use of corn for ethanol production is expected to grow at a much slower rate next year (7 percent) than during the current year (20 percent), so that the use of corn for all food, seed, and industrial purposes is expected to grow by 110 million bushels, or 4 percent.

U.S. corn exports during the year ahead are expected to increase by 150 million bushels over the disappointing shipments of the current year. Consumption of corn outside the U.S. is expected to increase by only about 0.5 percent (88 million bushels), but the U.S. is expected to increase export market share at the expense of China and South America.

Stocks at the end of the 2005-06 marketing year (September 1, 2006) are projected at 2.54 billion bushels, an increase of 325 million bushels from the expected level of stocks at the end of the current marketing year. The projected stocks-to-use ratio is 23.8 percent, compared to 21 percent this year, and 9.4 percent last year. The 2005-06 marketing year average farm price of corn is projected in a range of $1.55 to $1.95, down from the $2.00 to $2.10 level expected for this year. At the close of trade on May 13, the futures market was offering a 2005-06 marketing year average price near $2.12, $.37 above the midpoint of the USDA's projected price range. The midpoint of the USDA's projected price range is near the projected price based on the relationship between ending stocks and price during the period 1998-99 through 2003-04. That projection, using USDA supply and consumption forecasts, is $1.78. On the other hand, the market price is near the average projected by the relationship between stocks and price during the period 1989-90 through 1997-98. That projection is $2.19.

Using March planting intentions for soybeans and a projected yield of 39.9 bushels per acre (based on 1978-2004 regional trend analysis), the USDA projects the 2005 U.S. soybean crop at 2.895 billion bushels. That projection is 246 million smaller than the 2004 crop and 8 million bushels smaller than expected use during the current marketing year. For the year ahead, the USDA projects a 40 million bushel increase in the domestic soybean crush, driven by a 2.5 percent increase in both meal and oil consumption. Exports are expected to increase by 25 million bushels. Stocks at the end of the 2005-06 marketing year are projected at 290 million bushels, 65 million less than expected inventories at the end of the current marketing year. The year ending stocks-to use

ratio is projected at 9.8 percent, compared to 13.6 percent this year, and 4.6 percent last year.

The 2005-06 marketing year average from price of soybeans is forecast in a range of $4.70 to $5.70, compared to the average of $5.65 expected this year. At the close of trading on May 13, the futures market was offering a 2005-06 marketing year average price near $5.86, $.66 above the mid-point of the USDA's forecast price range. Using USDA's supply and consumption forecasts and the relationship between stocks and price during the period 1989-90 through 1997-90, the 2005-06 marketing year price would be expected to be near $6.16, $.30 above the current market. Using the relationship between stocks and price during the period 1998-99 through 2003-04, the average 2005-06 marketing year price would be expected to be near $4.70, equal to the low end of

the USDA's projected range.

There appears to be ample opportunity for volatile corn and soybean prices over the next several months for at least two reasons. First, there will be ongoing uncertainty about supply and consumption that will generate the usual movement in prices. Second, there appears to be a fair amount of uncertainty about what corn and soybeans are worth for any given set of supply and consumption forecasts.

Issued by Darrel Good

Extension Economist
University of Illinois