U.S. Ethanol and Biodiesel Markets and Profits – Net Losses for Ethanol & Biodiesel Plants in July 2019

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 July, with estimated losses of ($0.25 /gallon) in June 2019.

During the July 1-26, 2019 period, corn input purchase prices for Iowa ethanol plants averaged $4.29 /bu – compared to $4.17 in June, and $3.63 1/2 /bu in May.  Selling prices of distillers dried grains (DDGS) (10% moisture) averaged $134.18 /ton during July 1-26, up from $130.53 /ton in June, and up from 118.63 /ton in May. The selling price of ethanol via tank car and truck shipment out of Iowa ethanol plants has averaged $1.47 /gallon during July 1-26, up marginally from $1.46 /gallon in June, and from $1.25 /gallon in May.

Overall, during the July 1-26, 2019 time frame, the estimated cost of production of a representative ethanol plant in Iowa has averaged $1.72 per gallon – comparable to $1.69 in June, $1.53 per gallon in May, and $1.43 in April.  This has lead to an estimated average negative net return of minus $0.25 per gallon produced so far in July 2019, with is comparable to losses of $0.22 /gallon in June and losses of $0.27 /gallon in May 2019.

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B. Ethanol Production & Stocks Trends

Since the beginning of the “old crop” 2018/19 marketing year (MY) for U.S. corn on September 1, 2018, U.S. ethanol production has averaged 1.036 million barrels per week over 46 weeks. At this average pace, U.S. ethanol production would reach 15.878 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 5.611 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 have a more conservative, cautious perspective.  In the July 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 had 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.  Now again in July U.S. ethanol stocks have increased – leading to larger corn supply-demand balances, and together with higher priced corn inputs are pressuring the profitability of U.S. ethanol plants.

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 July 1-26, 2019 period.

By Kansas State University estimates, during the July 1-26, 2019 period, soybean oil input purchase prices for Iowa biodiesel plants averaged $28.03 per cwt – up from an average price $27.64 /cwt in June 2019.   This occurred while Biodiesel selling prices averaged $2.81 /gallon during 7/1-30/2019, being up from $2.72 /cwt in May.

Also during the July 1-30 period, the cost of production at representative biodiesel plants in Iowa has averaged $2.85 per gallon – up from $2.75 per gallon June, and from $2.70 /gallon in May.  As a result, net returns of this representative soy biodiesel plant is Iowa during July were estimated a loss of $0.04 per gallon produced.  This is comparable to a projected monthly average loss of $0.03 per gallon in June, and 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, July 30, 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.

U.S. Ethanol and Biodiesel Markets and Profitability – Financial Losses for Ethanol and Biodiesel Plants in June to Date

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.

U.S. Ethanol and Biodiesel Markets and Profitability – Moderate Losses for Ethanol and Biodiesel in April to Date

A. Ethanol Price and Profitability Trends

By Iowa State University estimates, ethanol plants in Iowa and other Midwest states were operating at losses of $0.10 to $0.23 per gallon from September 2018 through March 2019 – with $0.14 /gallon losses in March 2019.  By Kansas State University calculations, these losses extended into the April 1-19 period, with losses of $0.12 / gallon.

During the April 1-19, 2019 period, corn input purchase prices for Iowa ethanol plants averaged $3.47 /bu – compared to 3.55 /bu in March.  Selling prices of distillers dried grains (DDGS) (10% moisture) averaged $138.17 /ton during April 1-19, up from $135.77 /ton a month earlier. The selling price of ethanol via tank car and truck shipment out of Iowa ethanol plants has averaged $1.29 /gallon during April 1-19, down from $1.3086 /gallon in March.

Overall, during the April 1-19, 2019 time frame, the estimated cost of production of a representative ethanol plant in Iowa has averaged $1.41 per gallon – comparable to $1.45 per gallon in March, and $1.44 in February.  This has lead to an estimated average negative net return of minus $0.12 per gallon produced so far in April 2019, with is comparable to losses of $0.14 /gallon in March and losses of $0.23 /gallon in February 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 1.026 million barrels per week over 32 weeks. At this average pace, U.S. ethanol production would reach 15.730 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 5.558 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 April 9, 2018 seem to account for this.  In the April 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.

However, the pace or weekly rate of U.S. ethanol production has slowed marginally during February – April 2019 (to date) compared to the September 2018 through January 2019 period.  For September 2018 through January 25, 2019, U.S. ethanol production averaged 1.034 billion barrels per week, while that rate slowed 3.1% to 1.004 per week for the weeks ending February 1st through April 12th.

At the same time U.S. ethanol stocks have remained at historically high levels – burdening the ethanol market and having a negative impact on U.S. ethanol prices.  To explain, for the “current” 2018/19 marketing year period from September 1, 2018 through the week ending April 12th, U.S. ethanol stocks have averaged 23.463 million barrels (mln brls) per week.  This compares to average end of week ending stocks for previous U.S. corn marketing years of 22.201 mln brls per week in “old crop” MY 2017/18; 21.259 mln brls per week in MY 2016/17; 20.846 mln brls in MY 2015/16; 19.466 mln brls in MY 2014/15; 16.618 mln brls per week in MY 2013/14; 18.104 mln brls per week in MY 2012/13; 19.569 mln brls per week in MY 2011/12; and 18.416 mln brls per week in MY 2010/11.  These data show the growing in U.S. ethanol stocks over the last few marketing years, and highlight the record size of U.S. ethanol supplies that burden the U.S. ethanol market at the present time.

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 April 1-19, 2019 period.

By Kansas State University estimates, during the April 1-19, 2019 period, soybean oil input purchase prices for Iowa biodiesel plants averaged $28.40 per cwt – down from an average price $29.13 /cwt in March 2019.   This occurred while Biodiesel selling prices averaged $2.77 /gallon during 4/1-19/2019, being down from $2.87 /cwt in March.

Also during the April 1-19 period, the cost of production at representative biodiesel plants in Iowa has averaged $2.81 per gallon – down from $2.86 per gallon March.  As a result, net returns of soy biodiesel product were down $0.05 /gallon, with a loss of $0.04 per gallon produced.  This is comparable to monthly average profits of $0.01-$0.02 /gallon during the January-March 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, April 23, 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.

U.S. Ethanol and Biodiesel Market-Profitability Graphics — Breakeven Operations But Flooding Disruptions in Places

Ethanol Price and Profitability Trends Through Late March 2019

By Kansas State University estimates, ethanol plants in Iowa and other Midwest states were operating at losses of $0.10 to $0.29 per gallon from September 2018 through February 2019, but were showing losses of $0.14 / gallon during the first three weeks of March 2019. A moderate increase in ethanol prices in March is the key factor causing the moderation in losses.

During the March 1-22, 2019 period, corn input purchase prices for Iowa ethanol plants averaged $3.53 3/4 /bu (compared from $3.57 /bu in February, and $3.54 in January).  Selling prices of distillers dried grains (DDGS) (10% moisture) have averaged $136.78 /ton during the March 1-22 period, down from $155 & $140 /ton in January and February, respectively). The selling price of ethanol via tank car and truck shipment out of Iowa ethanol plants has averaged $1.31 /gallon, up from $1.17 & $1.21 /gallon in January & February, respectively.

During March 1-22, 2019, the estimated cost of production of a representative ethanol plant in Iowa has averaged $1.45 per gallon – comparable to $1.42 per gallon in January and $1.47 in February.  This has lead to an estimated negative net return of minus $0.14 per gallon produced so far in March 2019, with is comparable to losses of $0.24 /gallon in January and losses of $0.26 /gallon in February 2019.

 

Biodiesel Price & Profitability Trends Through Late-March 2019

Reductions have also occurred in the estimated profitability of Biodiesel plants in Iowa and nearby states – although they are still estimated to have in essence broken even during the March 1-22, 2019 period.

During March 1st to 22nd, soybean oil input purchase prices for Iowa biodiesel plants averaged $29.49 per cwt – down from $30.11 /cwt in February.   This occurred while Biodiesel selling prices averaged $2.90 /gallon during 3/1-22/2019, being down from $2.96 /cwt in February.

Also during the March 1-22 period, the cost of production at representative biodiesel plants in Iowa has averaged $2.90 per gallon – down from $2.84 per gallon February.  As a result, net returns of soy biodiesel product were level, or breakeven, with a profit of loss of $0.00 per gallon produced.  This is comparable to profits of $0.02 /gallon in February, and breakeven in January. 

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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, March 26, 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.

   

Ethanol and Biodiesel Plant Profitability Turn Lower (U.S. Ethanol and Biodiesel Market-Profitability Graphics)

Ethanol Price and Profitability Trends Through Late-November 2018

By Kansas State University estimates, ethanol plants in Iowa and other Midwest states have continued to operate below breakeven during September and October, and to date in November 2018.  This follows from continued weakness in the selling price of ethanol.

During the November 1-23, 2018 period, corn input purchase prices for Iowa ethanol plants averaged $3.32 1/2 /bu (up from $3.17 /bu in September and $3.29 /bu in October).  Selling prices of distillers dried grains (DDGS) (10% moisture) have averaged $132.35 /ton during the November 1-23 period, up from $131.11-$131.30 /ton in September-October. The selling price ethanol via tank car and truck shipment out of Iowa ethanol plants has averaged $1.23 /gallon, up modestly from $1.22 & $1.21 /gallon in September-October, respectively. .

During this period, the cost of production at representative ethanol plants in Iowa has averaged $1.35 per gallon – up from $1.30 per gallon in September and $1.34 in October.  This has lead to an estimated negative net return of minus $0.12 per gallon produced so far in November, with is comparable to losses of $0.08 /gallon in September and losses of $0.14 /gallon in October 2018.

 

Biodiesel Price & Profitability Trends Through Late-November 2018

Reductions have also occurred in the estimated profitability of Biodiesel plants in Iowa and nearby states – although they are still estimated to have in essence broken even during the November 1-23, 2018 period.

During November 1st to 23rd, soybean oil input purchase prices for Iowa biodiesel plants averaged $28.83 per cwt – up from $28.42 /cwt from September and from $29.92 /cwt in October.   This occurred while Biodiesel selling prices averaged $2.84 /gallon during 11/1-23/2018, being down from $3.05 /cwt in September and $3.00 /cwt in October.

During the November 1-23 period, the cost of production at representative biodiesel plants in Iowa has averaged $2.84 per gallon – up from $2.82 per gallon in September, but down from $2.94 in October.  As a result, net returns of soy biodiesel product turned marginally negative, down to a loss of $0.01 per gallon produced – down significantly from an estimated profit of $0.23 per gallon in September and a profit of $0.06 /gallon in October 2018.

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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, November 27th 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.

Iowa Ethanol and Biodiesel Trend Estimates in Prices and Profitability

Ethanol Market & Price Trends during Early-Mid October 2018

By Kansas State University estimates, Iowa ethanol plants have declined in profitability to date in October 2018.  This follows from declines in both the selling prices of ethanol and distillers grains since the beginning of the month, and increased cost of corn purchases going into Iowa ethanol plants.  During the October 1-19 period, corn input purchase prices for Iowa ethanol plants averaged $3.28 /bu (up $0.108 /bu from September), distillers dried grains (DDGS) (10% moisture) selling prices averaged $130.56 /ton (down $0.55 /cwt), and ethanol tank car and truck selling prices at Iowa ethanol plants averaged $1.21 /gallon (down $0.014 /per gallon from September).

During this period, the cost of production at representative ethanol plants in Iowa has averaged $1.34 per gallon – up from $1.30 per gallon in September.  This has lead to a negative net return of minus $0.13 per gallon produced – down from an estimated loss of $0.08 per gallon in September 2018.

Biodiesel Market & Price Trends in Early-Mid October 2018

Reductions have occurred in the estimated profitability of Iowa Biodiesel plants – although they are still estimated to have covered costs during the October 1-19 period.   During the October 1-19 period, soybean oil input purchase prices for Iowa biodiesel plants averaged $30.11 per cwt (up from $28.42 /cwt from September), while Biodiesel selling prices averaged $3.00 /gallon (down $0.05 /per gallon from September).

During this period, the cost of production at representative biodiesel plants in Iowa has averaged $2.95 per gallon – up from $2.82 per gallon in September.  This has lead to a positive net return of $0.05 per gallon produced – down significantly from an estimated profit of $0.23 per gallon in September 2018.

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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” was made for WILL (Illinois Public Radio) as supporting reference information for a program to that will be aired on Monday, October 22nd.  This presentation 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.

 

U.S. Ethanol and Biodiesel Market-Profitability Graphics: Through 9/2/2018

In August 2018 ethanol plants in Iowa (and by proxy – in the U.S.) are estimated to have been marginally under breakeven for the first time since March 2018, with small losses of approximately $0.01 /gallon.   Iowa ethanol prices estimated to have averaged $1.33 /gallon in August – down from the “tight” range of $1.40-$1.43 /gallon for March-July.  Distillers grains prices averaged near $129 per ton in August, up from $110 /ton in July, but still down from the range of $147-$175 in March-June.  Ethanol plant profits would have been much lower but for a continuation of lower corn input prices – estimated to have averaged $3.29 /bu – up from $3.21 /bu in July, but down from the range of $3.39-$3.70 /bu during March-June.  Given the sizable increase in U.S. ethanol stocks to record levels late summer levels that has occurred, it is somewhat surprising that U.S. / Iowa ethanol prices and ethanol profitability have remained as positive as they have in the summer of 2018.

By KSU estimates using an Iowa Biodiesel plant profitability model from Iowa State University Extension, U.S. / Iowa Biodiesel profitability has continued to be profitable, continuing an 8 month period (since January 2018) of positive, sizable returns over cost.  With Iowa Biodiesel prices estimated to have risen to $3.25 in August (up from $3.01 in July, and up from the range of $3.09-$3.22 during March-June, and with an estimated breakeven cost of $2.81 in August, estimated profits for the month in, U.S.-Iowa soy biodiesel profits are forecast to be plus $0.44 per gallon.  This would be up from estimated Iowa Ethanol Plant profits ranging from $0.16-$0.28 per gallon during March-July 2018.

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 Monday, September 2, 2018 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.