Ethanol producers deal with low demand

Des Moines Register
3:13 PM, Feb. 11, 2012
Written by DAN PILLER

Producers had lots left over after a federal tax credit ended. Also, exports to Brazil have decreased.

Ethanol has generated more than its share of detractors, but since Jan. 1 the biofuel’s real enemy has been the law of supply and demand, which has thrown red ink over Iowa’s 41 ethanol plants.

While the cost of ethanol’s feedstock, corn, remains above $6 per bushel, ethanol’s price dropped from $2.80 per gallon or more in mid-2011 on the Chicago Board of Trade to less than $2.20 per bushel since Jan. 1. Traders anticipated a drop in demand after a federal tax credit ended.

Demand for gasoline, to which ethanol is blended, fell by as much as 6 percent in January as motorists cut back. Ethanol exports to Brazil, a lucrative sidelight, dropped by 100 million gallons in January because of unfavorable exchange rate with the Brazilian Real.

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