IABRN — Various sectors of the agriculture industry are suffering, due to the global health pandemic. One of the latest cries for help comes from the ethanol industry.
Geoff Cooper, president and Chief Executive Officer for the Renewable Fuels Association, says the crisis for ethanol is unprecedented.
“Motor fuel demand is plummeting. Most analysts today are expecting a 20- to 25-percent drop in consumption, in the near term,” Cooper said. “We’ve seen ethanol prices fall to records lows. It’s not surprising that ethanol producer margins have also fallen and are deeply in negative territory in the last several days. These are some of the worst margins we’ve seen in the industry’s history.”
Compounding damage, lost demand from the trade war and small refinery waivers, has created “not just a ‘perfect storm,’ but a ‘perfect tsunami’ for ethanol,” according Cooper.
“Over the past week, we’ve seen many ethanol plants significantly reduce their output, while others are idling, entirely,” Cooper said. “We expect to see substantial reductions in ethanol production, in the weeks. ahead as producers contend with lower fuel demand, record low prices, and negative margins.”
Saving ethanol jobs with tax and credit relief will be key, followed by a request that the administration not appeal a court ruling upending small refinery ethanol waivers and apply the ruling nationally, according to ethanol proponents.
Scott Richman, chief economist at the Renewable Fuels Association, says corn prices are also suffering.
“We’ve seen corn prices slump on days when ethanol prices have slumped, and general markets have slumped. However, corn prices have not fallen as much as it would take to get ethanol production close to profitable,” Richman said.
This article originally appeared on the Iowa Agribusiness Radio Network
