Ethanol makers, who have been having a tough time making ends meet as their primary feedstock skyrocketed in price, are finally seeing some relief in lower prices… and better bottom lines.
The industry, which buys corn to make ethanol, has been finding it tough to make even a tiny profit, said ethanol consultant Mark Luitjens of Aberdeen, who has been part of the industry since 1992.
“For the past few months, the plants have struggled, and some have had negative (profit) margins,” he said. “Today, with the current cash price of corn and the price of ethanol, the plants are very close to breaking even or making a little money.”
Corn’s cash price was $5.21 a bushel late last month in Aberdeen. In late June and early July, it surpassed $7. Ten years ago it was $1.50, the lowest it had been since the 10 years before. The average for the past 15 years is $2.25 to $2.35, Luitjens said.
“Then the past couple of years it just went wild.”
Now it’s taming down. The futures price is $2.20 a bushel less than it was three weeks ago, [Nathan Schock of Poet, a Sioux Falls-based ethanol enterprise] said.
The story also says that much of the rise in corn prices has been fueled by speculators… and not any real supply-and-demand factors. Those in the ethanol industry are hopeful that speculation is over and real market forces, such as the expected large corn crop this year, will help keep corn prices in a range where farmers and refiners can make some money.