Food vs. fuel

Looks as if the mainstream financial media is catching on to something readers of Whiskey & Gunpowder and The Rude Awakening have known about for some time now — the burgeoning demand for ethanol that's largely to blame for an increase in corn prices.

Dan Amoss from Strategic Investment draws our attention to a Bloomberg article, which of course finds ethanol producers scoffing at the notion that their subsidized industry is putting a squeeze on corn supplies:

Supporters of ethanol dismiss the idea of a tradeoff between gas tanks and stomachs. "We ultimately have the resources to continue to produce for food and energy,'' says Bruce Rastetter, CEO of Iowa Falls, Iowa-based Hawkeye Holdings Inc., the third-biggest U.S. ethanol processor. "It doesn't mean we won't have bumps in prices along the way."

Dan notes: "I imagine that we're in the early stages of a 'farmland bubble,' prompted by Congress and the administration's incredibly misguided ethanol policy.

Chris Mayer agrees, and his latest issue of Mayer's Special Situations has a farm equipment pick that's poised to profit from this very trend.