Analyst: Ethanol Is ‘Glaring Omission’ In Relief Package

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Stocks and commodities suffered losses again to start the week. Crude oil prices fell to historic levels and traded into a negative price range on Monday. The May crude oil contract closed at a negative $37.63 and June crude oil closed at $20.43 Monday.

“It’s all about storage,” says Peter Meyer, head of grain and oilseed analytics with S&P Global Platts. “It’s the same issue we had with ethanol at the moment. There is just no storage left. Refineries are just shut down given the lack of demand and the lack of demand on the coronavirus front.”

This all occurred days after USDA announced the $19 billion Coronavirus Food Assistance Program (CFAP) to support farmers and ranchers during the COVID-19 pandemic. USDA says it will provide $16 billion in direct payments to farmers and ranchers in various sectors.

However, ethanol groups like the Renewable Fuels Association said they were displeased in a press release and felt the deal could have included ethanol:

While the package will help the nation’s farmers and ranchers, it does not provide any assistance to America’s ethanol industry, which has been devastated by the effects of the COVID-19 pandemic.”

Renewable Fuels Association President and CEO Geoff Cooper said, “While we appreciate that USDA’s new program provides needed assistance to the nation’s farmers and ranchers, it is unfortunate and disappointing that the 350,000 workers supported by America’s ethanol industry were left behind.”

Meyer says the ethanol market was a “glaring omission” in the relief package.

“I did hear Ag. Secretary Sonny Perdue [say] there were too many demand sectors to satisfy them all. Maybe if they feel they have to offer a bailout package to ethanol, they have to offer a bailout package to oil,” says Meyer. “At this point, it’s fairly obvious everyone has their hand out.”

Meyer believes farmers need to pay attention to the demand sectors at this point.

Watch the clip with Meyer and Clinton Griffiths here.