Ethanol prices have been volatile

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

We have seen some pretty dramatic changes in ethanol prices over the past couple of months. In mid-February prices bottomed out near $1.90 per gallon but over the following six weeks prices roared higher reaching $3.15 per gallon by the end of March. Now prices are plunging again with a price of $2.50 per gallon last week and the chance of further erosion this week.

The transportation problems were at least one factor causing the big price run-up. Blenders on the coasts were having difficulty getting ethanol when they needed it. In fact, when ethanol prices were near their peak in late March, they were significantly higher than wholesale gasoline prices making the blending margins negative. With the recent decline in ethanol prices, and stronger gasoline prices, blending margins have turned positive again – but they are pretty slim.

click image to zoom There has been a pretty significant increase in corn prices over the last three months as well. Back in Mid-February when ethanol prices were at their low, the Central Illinois corn price was $4.29 per bushel. By last week the corn price was up to $4.76 per bushel. DDG price swings more closely correspond to ethanol prices, at least over the last few months.

The big swings in ethanol prices have resulted in big swings in net margins for ethanol producers. Net returns over processing costs were about 45 cents per gallon back in mid-February, based on the University of Minnesota ethanol budget. The net margins rose to $1.73 per gallon when ethanol prices reached $3.15 per gallon, but now they are back to the $1 per gallon level. The net margins for this week may be slightly lower, but ethanol production profits are still pretty good.

Ethanol production has been running close to a 14 billion gallon per year annualized rate over the last few weeks and the average of the weekly production reports puts the pace at 13.8 billion gallons so far this crop year. EPA has not yet set the ethanol blending mandate for 2014, but the proposal in November had corn-based ethanol at just slightly above 13.0 billion gallons. So if EPA sticks to their proposed mandate we need to see strong exports if we are to sustain the current production pace. It takes about 5.0 billion bushels of corn to produce 13.8 billion gallons of ethanol and we are nearly 8 months into the corn marketing year.

Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...

Comments (0) Leave a comment 

e-Mail (required)


characters left

Grain Storage Systems

Behlen Grain Storage Systems offers large capacity bins with diameters from 16’ to 157’ and capacities exceeding 1,500,000 bushels. All ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form