A. Ethanol Price and Profitability Trends
By Iowa State University model estimates, ethanol plants in Iowa and other Midwest states were operating at losses of $0.22 /gallon losses in May and so far in June 2019.
During the June 1-21, 2019 period, corn input purchase prices for Iowa ethanol plants averaged $4.12 /bu – compared to 3.63 1/2 /bu in May. Selling prices of distillers dried grains (DDGS) (10% moisture) averaged $129.87 /ton during June 1-21, up from $120.81 /ton a month earlier. The selling price of ethanol via tank car and truck shipment out of Iowa ethanol plants has averaged $1.45 /gallon during June 1-21, up from $1.294 /gallon in May.
Overall, during the June 1-21, 2019 time frame, the estimated cost of production of a representative ethanol plant in Iowa has averaged $1.66 per gallon – comparable to $1.52 per gallon in May, and $1.42 in April. This has lead to an estimated average negative net return of minus $0.22 per gallon produced so far in June 2019, with is comparable to losses of $0.22 /gallon in May and losses of $0.12 /gallon in April 2019.
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B. Ethanol Production & Stocks Trends
Since the beginning of the “current” 2018/19 marketing year (MY) for U.S. corn on September 1, 2018, U.S. ethanol production has averaged 1.033 million barrels per week over 41 weeks. At this average pace, U.S. ethanol production would reach 15.832 billion barrels in “current” MY 2018/19. Further, at a rate of 2.83 gallons of ethanol per bushel of feedgrain used for ethanol production (corn and/or grain sorghum), at total of 5.594 billion bushels of feedgrains would be used for ethanol production in the current marketing year.
The USDA’s latest World Agricultural Supply and Demand Estimates (WASDE) report on June 11, 2018 seem to account for this. In the June WASDE report the USDA projected that in current MY 2018/19 a total of 5.500 billion bushels (bb) of U.S. corn would be used for ethanol production, and that 100 million bushels (mb) of U.S. grain sorghum would be used for Food, Seed, and Industrial (FSI) uses – which is primarily industrial ethanol production.
United States’ ethanol stocks have declined moderately during April-June from historically high levels in March 2019 – which had been burdening the ethanol market and having a negative impact on U.S. ethanol prices. Growing in U.S. ethanol stocks over the last few marketing years had led to much lower U.S. ethanol prices through mid-May 2019. However, concerns about 2019 U.S. corn production and ethanol availability prospects, and strengthening seasonal demand for U.S. gasoline has caused ethanol and gasoline prices overall to increase from mid-May to highs in early June 2019.
C. Biodiesel Price & Profitability Trends
Reductions have also occurred in the estimated profitability of Biodiesel plants in Iowa and nearby states – although the losses are comparatively small relative to ethanol producing facilities during the June 1-21, 2019 period.
By Kansas State University estimates, during the June 1-21, 2019 period, soybean oil input purchase prices for Iowa biodiesel plants averaged $27.56 per cwt – down from an average price $28.08 /cwt in May 2019. This occurred while Biodiesel selling prices averaged $2.70 /gallon during 6/1-21/2019, being down from $2.80 /cwt in May.
Also during the June 1-21 period, the cost of production at representative biodiesel plants in Iowa has averaged $2.74 per gallon – up from $2.71 per gallon May. As a result, net returns of soy biodiesel product were a loss of $0.04 per gallon produced. This is comparable to monthly average profits of $0.09 /gallon during the May 2019 period.
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Following are some graphics on U.S. Ethanol and Biodiesel Market price and profitability trends in the , which will soon be available on the KSU AgManager website: http://www.agmanager.info/
The full presentation titled “U.S. Ethanol & Biodiesel Market Situation” made for WILL (Illinois Public Radio) on Tuesday, June 25, 2019 and will be located at the KSU AgManager.info website – at the following web address:
http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter
Following are the graphics of this presentation.
ksugrains 