Ethanol makers have enjoyed a run of high profits since March 2013, “driven by a combination of steady or rising ethanol prices and falling corn prices,” write economists Scott Irwin and Darrel Good at farmdoc daily. Although ethanol prices are down from their April peak, “ethanol production profitability remains about a dollar per bushel above the long-term average.” Scott and Irwin say the cause appears top be a recent surge in ethanol exports.
“If that is the case, prospects for ethanol trade will continue to be a crucial factor in determining ethanol prices and production profits. This in turn can have important implications for usage of corn in ethanol production,” they conclude. USDA projects a record corn harvest this year and for corn-for-ethanol to hold steady at 5.05 billion bushels a year, or more than one-third of the U.S. corn crop.