Ethanol Prices Hit All-Time Low, Unconfirmed Reports Of Plant Shutdowns

Corn Used For Ethanol Production May Lose 120-170 Million Bushels, Economist Says


By Jerry Perkins, Successful Farming - 3/17/2020


DES MOINES, Iowa -- Corn demand by the U.S. ethanol oil industry could drop by 120 to 170 million bushels during the next two months if gasoline consumption – and the ethanol blended with it – continues to decrease as expected.


That’s according to Todd Hubbs of the Department of Agricultural and Consumer Economics at the University of Illinois. In an analysis posted March 16 on the farmdocdaily website, Hobbs wrote that an estimated 15% to 20% reduction in gasoline consumption that is expected by many industry analysts in the next couple of months will lead to a decrease in demand for corn to make ethanol.


“If gasoline consumption falls by the expected amounts over the next two months, corn used for ethanol production may lose 120 to 170 million bushels,” Hobbs wrote. “A continuation of reduced economic activity for an extended period will only exacerbate the demand loss. If the U.S. economy can recover, strong ethanol use looks likely as we move into the final months of the marketing year. Over the short run, the reduced consumption of corn used for ethanol places an added emphasis on export markets for corn prices.”


The downturn in demand for ethanol, which is blended at a 10% rate in almost every gallon of gasoline consumed in the U.S., is coming at a time when ethanol plants were already economically challenged by the Small Refinery Exemptions granted by the Trump administration’s EPA and by the loss of the Chinese ethanol export market because of the trade war against the Chinese being waged by the Trump administration.


Jim Burkhard, vice president and head of oil markets HIS Markit Watch, said the plunge in gasoline prices and the resulting drop in ethanol prices are setting records...