Click on title to read article
Ethanol prices have weakened since mid-summer as additional plants have come on line adding to ethanol supplies and contributing to some infrastructure bottlenecks, noted USDA Chief Economist Keith Collins (below) in a recent speech. Prices at ethanol plants in
Historically, ethanol prices have been at a premium to gasoline. Until recently, ethanol premiums averaged 50 cents per gallon compared with unleaded gasoline. This situation has suddenly reversed, with wholesale ethanol prices in
In his speech, Collins said with current retail gasoline prices at $2.80 per gallon, wholesale prices without federal and state excise taxes would be about $2.20 per gallon. Nearby futures for ethanol are trading at $1.57 per gallon, 71 percent of the $2.20-per-gallon estimated wholesale gasoline price and about equal to ethanol's energy value relative to gasoline.
"This year's record corn production is bringing some relief to declining ethanol producer margins," he said. "However, despite the record corn harvest, corn prices remain strong supported by strong demand, record-high wheat prices, and strong soybean prices."
USDA estimates that a 40-million gallon
U.S. ethanol production capacity is now estimated at 6.9 billion gallons, up 2 billion gallons from a year ago. Production capacity is expected to increase sharply over the coming 18-24 months, if the 76 plants currently under construction are completed. The new construction would add 6.7 billion gallons of additional ethanol production capacity, bringing total capacity to 13.6 billion gallons potentially as early as late 2009.
Farm Bill debate. If you want updates on the Senate Farm Bill debate, which begins today, go here
Parting thought. Let's spend less time counting the days, and more time making the days count.