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Ethanol outlook “touch and go” first half of 2019

An ethanol market outlook suggests the next six months will be “touch and go” for many in the industry. 

Raymond James and Associates research analyst Pavel Molchanov says the crush spread is bottoming out, causing ethanol plants to idle production or in some cases close.

“That is the sign of a re-balancing market.”

He says a similar situation occurred in the oil market several years ago when barrels dropped to $30 dollars.

“We saw wells being shut in in places like Oklahoma, Alberta, etc. That was the bottom of the oil price.”

Oil eventually rebounded.

And during a presentation at the National Ethanol Conference in Orlando Tuesday, Malchanov predicted ethanol will too.

“I’m not going to make a prediction on where exactly the crush spread is going to be in three to six months. I’ll just say I think we’ve seen the worst in the rear-view mirror.”

One reason Malchanov is optimistic about ethanol longer-term is because he says more than 30 countries are instituting renewable fuels initiatives, and most of those nations will need U.S. ethanol to meet targets.