US loses ethanol exporter status after Midwestern drought

After a terrible summer for US ethanol producers, the country has shifted from net ethanol exporter to net importer for the first time in nearly three years.

The US imported 21,000 barrels per day more ethanol in August than it exported, according to the latest stats available from the Energy Information Administration’s Petroleum Supply Monthly report.

Until then, ethanol exports had exceeded imports every month since December 2009, when they were evenly balanced.

US net ethanol imports

The steep decline in monthly exports isn’t much of a shocker, given the terrible margins US ethanol producers have faced since a severe drought started baking Midwestern corn fields in May.

Every few weeks since, another ethanol maker has announced the decision to slow or idle its production.

As Murray Campbell, the head of Georgia’s only corn-based ethanol plant, told Platts in October: “Looking at what’s on the market now with the basis bids, we just decided we’d better let the market sort of straighten itself out right now, as thin as margins are and non-existent.”

Before the drought, the plant owned by Southwest Georgia Ethanol was cranking out more than its nameplate annual capacity of 100 million gallons. Now it sits idle while Campbell waits out high corn prices.

Bob Dinneen, president of the Renewable Fuels Association, one of two big ethanol trade groups in Washington, said next year might look just as bleak for the industry.

“It’s going to be a pretty tough year,” he told reporters Friday. “The economics right now are pretty challenging. But the demand for ethanol remains very strong and what you have today is producers looking to squeeze every drop of profitability out of the kernel, every drop of profitability out of their asset at the ethanol plant.”

Dinneen said the ethanol industry would emerge from the drought stronger and more efficient.

“That’s what happens when you have to go through these type of situations,” he said. “It’s getting through it that’s always a challenge.”

Dinneen considers it possible that more plants will slow production or shut, even though they’re “pretty down near the bottom now, as near as I can tell.”


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Comments

  1. Meghan Gordon at November 29, 2012 5:08 pm

    This trend has continued for a second month, which isn’t much of a surprise considering the severity of the drought. You can see the latest stats here: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MFENT_NUS-Z00_2&f=M

    They show that the US imported 63,000 b/d of ethanol in September, compared with 40,000 b/d of exports. September’s 23,000 b/d in net imports were almost 10% higher than August’s net imports of 21,000 b/d.

     
  2. Francis Patrick at November 14, 2012 9:24 pm

    Hello? You really think that corn would be at a $2-$3/bushel if it weren’t for ethanol? How would farmers be able to grow corn at that price? Not without massive subsidies. You guys just don’t want to change.

     
  3. Bob Albers at November 14, 2012 6:57 pm

    The very best use of ethanol is making Jack Daniels. As a motor fuel it’s bad news unless you have a source as abundant as Brazil. It can’t be pipelined, therefore it must be trucked. This means that the delivery price is high. I don’t count “government subsidies” because 100% of those come out of my pocket or my grandchildren’s pockets. “Government Money” is a fiction. Its all my money, your money, or is it our debt to be paid off by our grandchildren much as our parent’s debt is being paid off by us.

     
  4. Mike B at November 14, 2012 4:43 pm

    The price of food went up primarily because the cost of diesel fuel to transport food goods went up, not because the cost of corn went up. The price of corn only makes up 4% of the price of corn flakes, for instance.

     
    • Stik at November 23, 2012 1:28 am

      Not to mention, sugar-cane based ethanol processing is eight times as efficient as corn-based, and Brazil would be more than happy to ship us their ethanol by the tankerful that is, if the idiots in congress hadn’t slapped a fifty-cent-a-gallon tarriff on it. Good going, guys. Blocking a renewable energy source from a friendly ally in the middle of a war on petrodollar-fueled terror. That makes tons of sense!

       
  5. Tom_B at November 14, 2012 8:24 am

    Just think, If it were not for the government subsidies, (1) the corn-to-ethanol plants would probably never have been built, (2) corn prices probably would be where they were when the government demanded fuel producers put 10% ethanol in the motor fuel and (3) the prices for all of the foods using corn as an ingrediant probably would also be much cheaper than they are presently. Members of Congress probably made a great deal of money when it passed this legislation, or they received a great deal of contributions from those involved. We have the best Congress money can buy! :)

     

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