News

2019 an L for ethanol

The U.S. ethanol industry is coming off its first losing season in seven years.

University of Illinois ag economist Scott Irwin says there were a couple of reasons why.

“One, a deterioration in the net trade position of the U.S. ethanol industry in 2019. And some rather healthy increases in the production efficiency of ethanol plants.”

He tells Brownfield small refinery exemptions had much less to do with the profit situation of the ethanol industry, which he figures lost an average of $1.6 million in 2019.

The last time the sector finished in the red was 2012.

Irwin suggests this year could also be tough, depending on China.

“If China comes through with real purchases to fulfill their obligations under the phase one agreement, I think ethanol exports would definitely benefit. And I think it would probably cause a nice pop in ethanol prices.”

But if that doesn’t happen, he says more ethanol plants could idle production or shutter.