Citing negative crush margins as one of the reasons, another Midwestern ethanol plant has temporarily suspended production.
Officials of NEDAK Ethanol, a 44 million gallon plant in Atkinson, Nebraska, say they will use the shutdown to complete regular spring maintenance. But they also indicate they will not resume production until crush margins have returned to profitable levels.
Plant officials say the negative margins are being caused by high corn prices and a surplus of ethanol.
Renewable Fuels Association (RFA) president Bob Dinneen says as gasoline usage continues to decline, so does the demand for ethanol.
“The amount of gasoline sold annually is falling—today it’s going to be probably less than 135 billion gallons of fuel,” says Dinneen, “so at ten percent—if you limit it to just ten percent—you really can’t sell much more than 13 billion gallons of ethanol in this country.”
At the same time, ethanol production is now nearing 14 billion gallons. Exports were able to absorb the extra one-billion gallons of production last year, but Dinneen says export demand is weaker in 2012.
“The export markets have not been quite as robust this year as last,” he says, “and unless we’re able to move beyond ten percent ethanol, there will be some real challenges for the ethanol industry.”
That’s why RFA and other ethanol groups are scrambling to convince retailers to offer E15 to their customers.
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