The Biofuels Benchmarking 2012-13 Annual Report is out and in addition to identifying past, current and future biofuel trends, the report identifies some emerging trends for the ethanol industry. During an interview with John Christianson, partner with Christianson & Associates, PPLP (C&A), I asked him what trends they have been seeing and he noted five in particular of importance.
Christianson noted that spinning corn oil off the back of the plant has had a big impact on the industry and to date, nearly 75 percent of all ethanol plants are using a corn oil extraction technology. He also noted that 2012 was a very difficult year for the ethanol industry, very tight margins, and with the high feedstock costs, it really squeezed margins for the year. He said that when looking at the Benchmarking report the industry was hovering over break-even and the laggards were losing money and the leader plants were making money.
“In the first two quarters of 2013 we’re seeing a really nice trend where we’re getting upward into the areas where we have some positive grind margins,” said Christianson. “This is due to ethanol net-back prices staying strong in 2013 first two quarters and our feedstock costs dropping off and having better margins.” He anticipates this will continue into 2014.
The last year also saw ethanol yields drop a bit due to the drought-ridden 2012 harvest; however, Christianson said based on forecasts for the 2013 harvest, yield should go back up once the ethanol plants start grinding 2013 harvest corn and the industry should go back on the trend of increasing yield each year.
Other trends include the sophistication of the ethanol industry on their grind margin management, improved risk management practices and improved environmental sustainability. “So enhanced risk management and enhanced production efficiencies going forward are going to allow plants to squeeze out as much profitability as possible,” said Christianson.
Listen to John Christianson discuss current ethanol trends in detail here: Must Know Ethanol Trends