Ethanol Producers Still Profitable

Hoosier Ag Today
12/01/2008
by Gary Truitt

Much has been made of the ethanol industry’s economic troubles; but, as one economist points out, the critics are missing an important point. That point is that corn prices, ethanol prices, and oil prices all move in together. So when oil prices go down, corn prices go down, and ethanol prices go down. This means that the profit margins for ethanol producers remain pretty much the same. According to University of Illinois ag economist Darrell Good, “Most of the ethanol plants are continuing to operate, and most will continue to do so although some will have new ownership.” This means that there will not be a drop in ethanol production capacity, despite some well-publicized bankruptcies. Thus, the demand for corn by the ethanol industry will likely remain unchanged from 2008 to 2009.

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