US Ethanol

28 September 2021

US Ethanol

After a continuous decline in US ethanol production since early July, it is increasing once again. Will the availability of new crop corn help ethanol plants to put their idle capacity to use?

Ethanol margins are near the highest in six years for plants in Illinois. For other states, the story is similar.

Demand for biofuels is likely to increase in Europe and USA this year, owing to high prices for fossil fuels, prompting high domestic demand for US corn and soybean, right at harvest. Ethanol exports are also likely to increase from the United States.

Domestic crush margin is already making new highs across US corn belt, incentivising plants to run at full capacity. Higher margin for producing ethanol will surely incentivize increased corn consumption and slow exports out of Gulf terminal will help lower the basis levels near to these plants. We believe that a higher portion of US corn will move to domestic ethanol industry this year, compared to last few years.