Bulls in the corn field, beware! Ethanol from corn? Mooooo.

Those are market bulls of the two-legged sort similar to the ones currently jacking up crude oil futures. The next great investment bubble may focus on the fields of Iowa.

Those are market bulls of the two-legged sort similar to the ones currently jacking up crude oil futures. The next great investment bubble may focus on the fields of Iowa. Today's Department of Agriculture numbers on the American corn crop (the world's largest) are not encouraging for corn buyers, and that means more profit for agribusiness and that includes big oil. Sure makes you proud to be an American taxpayer so willingly subsidizing both the corn and oil industries. Corn's currently worth than fifty billion dollars per year in the US, making it our #1 farm crop and worth double what the #2, soybeans, brings in.

The crop drop for corn: could be as much as 10% says the US Department of Agriculture. Problems this year from wet spring across the Corn Belt. Worldwide corn production is also going to be down this year. That's bad news for livestock growers, and anybody who eats ham or an occasional BLT. First, they recall all the tomatoes*, now the price of bacon is going to get even higher. Of course, that means the corn futures are up.

CORN ETHANOL OVER ONE FOURTH OF CURRENT U.S. CROP This new corn-down means investors may hesitate to plow more money into corn-based ethanol. Current estimates are that 4 billion bushels of corn will go into making ethanol biofuels this year. That's more than a fourth of the less than 12-billion bushels now expected in the '08 harvest. It brings into sharper relief the food or fuel fight.

All this will keep VCs interested in Vinod Khosla and other biofuel investors. Khosla has said he expects financial success for next generaton biofuels not made from food stock. And if you follow the VC world you know that John Gage has left Sun for Kleiner Perkins to work on alternative energy and cleantech investments. Gage was the #5 employee at Sun. And I knew Gage over thirty years ago, before there was even a Sun. At that time he was a grad strudent at Cal and was trying to help my beknighted TV news department figure how to use computers in reporting the 1976 election returns. That was so long ago, so many ones and zeros have passed through the digital world since then. My point: Gage has always been interested in the next new thing, the next tech innovation that can change the game. Love oil or hate it, use it or avoid it as you will, but it's clear the energy game is ripe for changing.

A HAPPY NOTE FOR BREAD LOVERS

They don't make fuel out of wheat, yet. And the world wheat crop will increase this year. Once again the U.S. the biggest producer. That healthy production could help control prices on bread, and wheat beer, dietary staples where I live.

* Tomato note, a bit of green as well: locally I bought several nice organic tomatoes at the local growers market this morning but most dealers had sold out before noon. Tomato shortage! Bloody mess for bloody mary supply!