China Says No to Corn Based Ethanol

According to the China Daily, China will eliminate corn as a feedstock for biofuels within the next 5 years. In corn's place, Chinese fuel producers will use sorghum, cassava and sweet potato, all higher yield plants that are not a staple food in the Chinese diet. From the article:

Part of the government’s efforts to develop bio-fuel without harming general food supply and security, the shift will ensure a healthy supply of corn both as food and fodder.

No big surprise, right? The rapidly growing and increasingly financially capable Chinese population needs to be fed, so diverting corn from food and fodder to fuel is by itself a risky gamble.

Add to this that last year China began importing US corn for the first time in 22 years, the result of tightening domestic supplies of grain. With escalating competition between the US and China almost assuredly the script that we'll all be reading from for the foreseeable future, there's no way China is going to put even a microscopic portion of their energy security in US hands and fields.

Right or wrong, the US market for corn-based ethanol certainly has a lot of room to grow domestically. There are too many politicians and investors right now with too much to lose and gain (respectively) but not allowing that to happen.

But for those who get this dreamy look in their eyes envisioning a OPEC-style corn ethanol cartel driven by the US, I have bad news: one of your biggest potential customers is missing.