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CoBank report suggests weak ethanol margins

A report from CoBank says abundant production will keep ethanol margins weak for the rest of 2019. The report, outlining sluggish ethanol demand, says a higher corn price because of declining production could force some ethanal plants to shut down or idle production.

The report is optimistic about ethanol exports because of China’s plan to convert to E10 by the end of 2020, accounting for about five billion gallons of ethanol. China can supply three billion gallons, so will need to import as much as two billion gallons.

The CoBank report says domestic U.S. ethanol demand will likely be flat over the next two years. Longer term, it says ethanol plant profitability will come from diversified revenues and growth in higher ethanol blends.