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Reduced ethanol production disrupts grain flow

A grain trader says reduced ethanol production and closed facilities has disrupted the flow of grain for the foreseeable future.

“You create some oversupply situations in Ohio, Indiana, Michigan, and other tributary states that just adds to the inventory of corn that needs to find a market.”    

Michigan Agricultural Commodities President Bruce Sutherland tells Brownfield in June, the Valero Ethanol Plant in Riga, Michigan near the Ohio border closed temporally on a month by month basis but doesn’t appear to be buying grain for at least another season.

“You take a fairly large consumer out of the market here, especially going into the fall, and it’s just one less market outlet here that producers will have.”         

The plant can process 19 million bushels of corn annually.  POET Biorefining cutbacks will also be felt at their Caro facility in the Thumb.

Sutherland says reduced production this year will help buffer the blow to basis, but production will pick back up.

“We will still I think see strong basis for corn, especially from the feed side of the marketplace, but we need to get these issues resolved longer term.”        

The Renewable Fuels Association is challenging the EPA which claims there’s “zero evidence” small refinery exemptions have had a negative impact on ethanol producers.  President and CEO Geoff Cooper says EPA’s announcement on August 9^th that more than 31 small refinery exemptions had been approved could result in $10 billion transferring from the ag and biofuel sectors to the oil industry.