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Feds Propose To Reduce Ethanol Requirement In Gasoline

The federal government proposed Friday to cut the amount of corn-based ethanol oil companies have to put in the gasoline supply, by more than a billion gallons. Much of the corn used to make that ethanol is grown right here in the Midwest. 

Cutting the amount of corn ethanol required in the Renewable Fuel Standard essentially puts a cap on demand for corn from the Midwest.

"The main implication is that the Renewable Fuels Standards are not going to ramp up in a manner that would continue to support as high of grain prices as we have seen in recent years," said Scott Irwin, agriculture economist at the University of Illinois.

Corn prices may not reach the high highs of recent years. But Irwin isn’t predicting a big drop off either, because current demand is still strong.

That means good times for Corn Belt farmers shouldn’t take a huge hit. Plus, ethanol producers are expected to challenge the EPA in court, and those appeals could take months or years.

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