Iowa Ag Secretary Bill Northey says some ethanol plants won’t be able to keep making the additive if corn prices stay so high. "These kinds of prices are not profitable to produce ethanol at the current ethanol price," Northey says.
The price of corn set for delivery in December crossed the $8-per-bushel mark last week and some experts say corn could go as high as $11-a-bushel. One bushel of corn can be converted into about two-and-a-half gallons of pure ethanol, but it’s tough for Iowa’s 28 ethanol plants to make a profit right now because of the price for a gallon of pure ethanol isn’t going up.
Northey believes some ethanol plant operators may choose to suspend production. "They’ll probably be some decisions of whether they want to keep processing or not at these prices, but who knows what the prices are two months from now," Northey says.
Some ethanol plants in Iowa were hit by floodwaters. "Right now we have about 300 to 400 million gallons of the ethanol industry that is not processing…that’s out of 2.2 billion gallons in Iowa, so it’s significant. It’s not all of the industry," Northey says. "The rest of the industry is all paying higher prices. If they hadn’t already bought their corn, they’re paying higher prices."
Many plants sign contracts with farmers, setting the price of the corn months before the corn is delivered to the plant. Northey made his comments on Iowa Public Television.