View from the Cab: Ethanol's future
By Kent Casson
Is ethanol the way of the future? Time will tell.
Everything stopped when people didn’t drive back in March of 2020 at the onset of COVID. Then, there was almost a full recovery in 2021-2022 before a setback last year. This year, however, we are ramping back up to pre-COVID numbers for ethanol.
“Ethanol has had its challenges lately,” Ben Peters of Advance Trading told a group of farmers attending a Livingston County ag meeting the other day.
The ethanol crush has been good going into the new year and has now settled a bit. While global sales of electric vehicles are still rising, there is growth in the hybrid vehicle market as well.
“This is a threat to ethanol,” admits Peters.
EPA announced it may use a modified GREET model to reflect on the carbon footprint and ethanol would be eligible for sustainable aviation fuel. GREET stands for Greenhouses Gases, Regulated Emissions and Energy Use in Transportation.
In order for our ethanol industry to remain relevant, there are a lot of politics to go through. Mexico is a big buyer of our corn and they like the lower prices currently. While exports are good and better than last year, we will see how it finishes out.
Just know that corn prices can go lower, according to Peters. South America exported more corn than we did last year and now growers in the traditional “I” states face competition in North Dakota, South Dakota and Kansas which are all good corn suppliers as well. It is no longer just Illinois and Iowa everyone is watching for corn production.
“South American corn production is a lot like last year,” observed Peters.
Producers nowadays will not market grain at the current low new-crop prices as it is easier to deal with the old crop which is un-marketed. Markets have changed quite a bit.
“It’s trying to buy bean acres,” adds Peters.
The next generation mandate and growth in aviation fuel could be bullish long-term. Brazil is harvesting beans and funneling them into the world pipeline.
No one wants to hear of lower prices in the present, but at least there are some glimmers of hope for demand down the road. We all have faith as farmers and that’s all we can to do survive in this world.
