“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:
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.