Ethanol plants idle as corn shortage and drought persists

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Last year’s historic drought dented the nation’s corn supplies, sending media, consumers and livestock producers into a corn and food pricing panic. Another industry – ethanol – is also feeling the pinch.

Twenty of the country’s 211 ethanol plants suspended production over the past year and aren’t expected to resume until August at the earliest.

According to a report by The Associated Press, production in 10 percent of the country’s ethanol plants may have been halted, but the controversial product is still flowing. Ethanol plants across 28 states produce more than 13 billion gallons of ethanol annually. Read more here.

While corn makes up 95 percent of ethanol, MSN Money reports that about 40 percent of U.S. corn is used to in ethanol production. This statistic has come under scrutiny as many wonder if corn should instead be diverted for food production – not fuel – as the drought lingers.

Purdue University Economist Chris Hurt suggests that ethanol production cutbacks won’t have much of an impact on consumers thanks to more than 20 million barrels of ethanol in stock and more fuel-efficient cars and driving habits. However, before ethanol production can truly “get back on its feet,” three things will need to occur:  the end of the drought, a good 2013 corn crop and lower corn prices.

"I cannot see any profitability in this industry until we get lower corn prices," Hurt added, "and it's going to take a reasonable-sized U.S. crop."

See, “Corn shortage hurts US ethanol production.”  

However, the weather forecast isn’t doing much to help. La Niña is now developing in the Pacific Ocean, and with La Niña comes little moisture to fully quench the drought in many central and western Corn Belt states. Click here to read more about the possibilities of another warm and dry spring.

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