NASHVILLE, Tenn. (RFD-TV) — Profit margins are seeing a slight uptick, giving the U.S. ethanol industry a boost. A Kansas State University ag economist says the sector remains a major corn consumer, using about 35 percent of the nation’s crop each year.
“The calculations through the first three weeks of September are looking pretty good. Profits based on that Iowa model, straddling Illinois and Nebraska and parts of Kansas, at least show about 24 cents a gallon in terms of profitability,” said Dan O’Brien. “The ethanol price has jumped up here of late. So, with the ethanol price going higher and the corn price sideways-to-lower, that’s when you get profits like this. So, for the last three months, we’ve had about 12 cents profitability in July, August, about 19-20 cents, and here early in the first three weeks of September, 24 cents.”
O’Brien says how long profitability will last depends on several factors, including whether grain sorghum gets used in more ethanol production.
“Unless an ethanol plant is closing down for some type of refurbishing or whatever, it would seem to be a pretty good time to run,” O’Brien said. “Really, I guess, how long we will maintain pretty decent motor fuel prices, and that will bring ethanol along as well in the light of the U.S. economy, and also add in moderate strength in even grain sorghum usage. In fact, in talking with USDA ERS economist Steve Ramsey, he indicated that we’ve had strong grain sorghum into ethanol, which is a surprise for the grain sorghum industry, given the weakness we’ve been seeing in exports.”
O’Brien says he remains hopeful that at least ‘okay’ profitability is ahead, as long as low price feed stocks hold up.
Clean Marine Fuels Could Supercharge U.S. Biofuels Demand
Global shipping is eyeing lower-carbon fuels, and the International Maritime Organization’s proposed “Net-Zero Framework” could open a vast new outlet for U.S. ethanol, biodiesel, and renewable diesel.
Geoff Cooper with the Renewable Fuels Association (RFA) notes that oceangoing vessels burn roughly 70–80 billion gallons a year. He says that capturing just 5% of American biofuels would mean 4–5 billion gallons of fresh demand, potentially leading to more than 1.5 billion bushels of additional corn use — an economic jolt for rural plants and farms.
The Department of Energy suggests that corn ethanol can cut marine GHGs by approximately 61 percent, soy biodiesel by 66 percent, and soy renewable diesel by 60 percent versus bunker fuel, allowing ships to earn compliance credits if the rule is implemented as proposed in 2027.
