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.
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.
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:
Following are the graphics of this presentation.