NASHVILLE, Tenn. (RFD NEWS) — China is rapidly expanding coal-based ethanol production, a shift that could disrupt global biofuel markets and reduce long-term demand for U.S. corn-based ethanol. The development, highlighted by retired USDA economist Dr. Fred Gale, signals a major pivot away from traditional grain-based biofuels.
Coal-based ethanol offers a lower-cost alternative that avoids reliance on corn or other crops. Production capacity has already grown sharply, with output rising 146 percent in 2024, and expansion plans are expected to push capacity above 10 million metric tons.
At the same time, China’s grain-based ethanol plants are struggling, with low utilization rates and financial losses in key regions.
Farm-Level Takeaway: Coal-based ethanol could weaken long-term export demand for corn-based fuels.
Tony St. James, RFD NEWS Markets Specialist
This shift reflects broader policy priorities in China, including food security concerns and rising grain prices. Officials have repeatedly scaled back corn ethanol programs in the past when supplies tightened. The growth of electric vehicles and reduced gasoline demand are also limiting the need for traditional biofuels.
For U.S. agriculture, the change could reshape export opportunities. China may be less likely to import ethanol or distillers grains if coal-based production continues to expand.
Economists are also closely watching how policy decisions in Washington could influence markets moving forward. Analysts say deferred futures for corn, soybeans, and wheat suggest markets are operating near break-even levels, not at prices that would encourage expanded production.
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