• Condensed by Lynda Kiernan

U.S. Ethanol Industry, Corn in Freefall From COVID-19

Decreased global demand for ethanol-mixed fuel due to the COVID-19 pandemic has the U.S. ethanol industry in South Dakota and throughout the Midwest in an economic freefall, just when the industry was already hurting from the ongoing trade war with China, a glut of oil production, and a price war between Russia and Saudi Arabia that sent prices even further south.

Brian Jennings, CEO of the American Coalition for Ethanol, said that the industry is seeing “unprecedented demand destruction”, adding that this year will likely be a “bloodbath for the industry”. Production levels for this year are expected to be down by 4 billion gallons, as 30 of the 200 ethanol plants in the U.S. have already been shuttered, and another 80 percent have cut output by 50 percent or more.

Per-gallon prices paid to producers have fallen to record lows, plummeting 37 percent in just one month from $1.24 on February 27 to .78 cents on March 27. This decline at the end of March also represented a 47 percent decline from a recent high price of $1.47 per gallon hit in South Dakota in November 2019.

Through association, corn has also taken a hit with per-bushel prices to producers in South Dakota falling by 16 percent, from $3.57 per bushel on February 28 to $2.99 per bushel on March 27. In a -typical year, South Dakota’s corn farmers produce about 800 million bushels of corn, of which 450 million go for ethanol production.

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Lynda Kiernan is Editor with HighQuest Group Media and of the Oilseed & Grain News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@highquestgroup.com.

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