Home Indiana Agriculture News The Corn Ethanol Struggle Amid COVID-19

The Corn Ethanol Struggle Amid COVID-19

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With travel across the U.S. severely limited, supply and demand basics are certainly not working well for the oil industry right now. By extension corn ethanol production continues to fall off, greatly affecting corn demand. Some analysts say corn is staring at a scary demand picture.

John Zanker with Risk Management Commodities in Lafayette, Indiana says gasoline demand has fallen like a rock.

“We have some people now estimating that total gasoline usage across the country is down 50 percent, so that’s just a staggering number that you and I never thought we’d talk about,” he said. “You have gasoline prices now at 54 cents on the futures (Monday) vs. ethanol at 96 cents, and that formula is not going to work. We’ve probably already shut down 15-20 percent of ethanol production.”

He says how bleak the picture could get is all tied to how long this new COVID-19 way of life continues.

“If we’re going to keep up something similar here through April, I think we’re down at least 300 million bushels of corn for ethanol usage,” Zanker told HAT. “If we take this deep into May, I think you’re looking at something closer to 500 million, and that’s maybe using the assumption that whenever we get the clear sign that all the ethanol plants are going to start right back up. But they were already operating in the red before all the coronavirus stuff happened.”

Zanker says the corn and ethanol industry recovery will not be an easy.

“I’m just not very optimistic, but my hat’s off to the ethanol people. They’ve been struggling with weak margins off and on for several years, but they’ve kept going and that’s been great for farmers. They sure have taken a beating this time.”

Ethanol experts at INTL FCStone estimate a possible 50% drop in corn grind in April and May. That’s a possibility of half of last year’s 440 million bushels for ethanol in April and 459 million bushels in May.