Ethanol Industry Overcapacity

Will Secor, a CoBank economist, projects operating margins for ethanol plants will remain weak for 2019. Sluggish ethanol demand, excess production capacity, and rising input cost will squeeze margins. As a result, Secor foresees some ethanol plants shutting down or idling production, most likely those with older technology or smaller plants located in areas with higher input costs.

Figure 3. Ethanol Plant Operating Margin

Source: ISU-CARD as cited by Will Secor, Ethanol Outlook Weak Amid Sluggish Demand, CoBank, July 2019.