USDA Numbers Confirm Declining Demand For Ethanol

Sep 13, 2019

The national average price for corn this season is back to $3.60 a bushel, about where it’s been most of this year except for an early-season spike ($4.16 in July) before the size and quality of the crop was known. 

That’s not great news for corn growers, and for the ethanol part of the market, the latest U.S. Department of Agriculture estimates are even worse.

The September World Agricultural Supply and Demand Estimate said the U.S. will use less corn in ethanol, a prediction that comes amidst growing anxiety and even plant closures in the biofuels industry.

Just three months ago, President Donald Trump announced that a higher blend of ethanol called E-15 would be available year-round, a move widely cheered by corn growers and ethanol producers. The support has all but dried up following the administration’s August decision to grant waivers that exempt many oil refineries from blending ethanol into their gasoline. 

Farmers and ethanol companies said the waivers, 31 approved out of 38 requested, would erode any gains from year-round E-15. And they are making their frustrations known. 

“The temperature is rising,” Renewable Fuels Association President Geoff Cooper said. “(The) message is getting across to the White House and I think the president is interested in finding some solution.”

Trump tweeted in late August his commitment to finding a fix that will please farmers. 

Cooper said the obvious one is to enforce the Renewable Fuel Standard, the law that sets legal requirements for how much ethanol must be in the country’s fuel supply.

The Renewable Fuels Association and other ethanol groups met with White House and Agriculture Department officials this week, as have representatives of big petroleum companies. As of Friday, neither an announcement nor a timeline for one has emerged.

At least 10 ethanol plants have closed over the past year and others have reduced production in states including Iowa, Indiana, Michigan, Minnesota and Wisconsin, according to Chris Bliley, vice president of regulatory affairs for Growth Energy, an association of ethanol producers. 

Bliley added that the most recent WASDE report furthers a steady decline in demand for corn to be used in ethanol. With the September estimate, he says the total is down 275 million bushels since November 2018.

“For us, it’s a clear indication of what these refinery exemptions have done to slow down plants, close plants, and you’re finally starting to see that in some of the data for corn use in ethanol,” he said.

Some smaller plants that haven’t closed may be hoping to hold on to a skeleton crew with the hope of coming back online when the current skirmish is resolved. A plant in northwest Iowa contacted by Harvest Public Media declined to speak on the record about its strategy, but an employee confirmed some workers were laid off this week.

And some corn farmers are saying they may reconsider their support for Trump if he doesn’t correct what they see as a broken promise on ethanol.

Follow Amy on Twitter: @AgAmyinAmes