Univ. of Illinois on the Outlook of Ethanol

The outlook for ethanol production begins to look more positive as the country gets back on the road. The University of Illinois has more details on the potential recovery of the industry.

Todd Hubbs with the University of Illinois states, “We saw this tremendous drop-off as the lockdown started going in around the country where gasoline demand dropped to a low of about 5 million barrels a day and since then we have seen a pretty rapid recovery, where last week we saw it come up to 7.4 million barrels a day.”

Ethanol prices at Iowa plants dropped as low as 60 to 70 cents per gallon; now, they are closer to a dollar. Scott Irwin with the University of Illinois adds, “It’s important to recognize that that is still, by a wide margin, the lowest prices that we’ve seen since 2007. We are still in an environment of very low ethanol prices.”

With plants slowly getting back to to business, prices have gone above the shutdown prices. However, there is still uncertainty for what the rest of 2020 will bring. Experts says that some plants will not survive the pandemic, but that may have little impact on corn usage.

According to Hubbs, “There’s a lot of excess capacity in ethanol production that can be removed and we can still be hitting these numbers that USDA has put out.” USDA is forecasting almost 5 billion bushels of corn usage for ethanol this year.

Several aid measures for the biofuels sector have been introduced in Congress, including a provision in the HEREOS Act and a stand-alone bill from Senators Chuck Grassley and Amy Klobuchar.