News

Analysts say some ethanol plants might not reopen after COVID-19

Two commodity analysts say the impact of the coronavirus outbreak on ethanol demand might permanently close some ethanol plants.

Dale Durchholz is the principal at Grain Cycles commodity consulting. He says, “There’s going to be some smaller, inefficient plants that if they’re shut down now, probably are not going to get restarted.”

Analyst Rich Nelson from Allendale agrees, saying there’s a wide range in regional-specific ethanol margins, plant sizes, and efficiencies. “In the past few years, there’s been a big building boom of making our current plants even larger, and we have a wide range of efficiencies. I mean you have some plants still doing 2.78, 2.77 gallons per bushel produced. Some plants are actually pushing 2.98.”

Durchholz says losing ethanol plants will impact the people living nearby and the market will have to replace that lost corn demand.  Nelson says closing plants will be hurtful at a time when yields are up worldwide, and the U.S. acreage should be having a slow decline.

Nelson and Durchholz made their comments during a Brownfield Ag News webinar on grains and ethanol Wednesday evening.