Under the states’ urgent efforts to flatten the COVID-19 infection rate, the U.S. economy is slowing precipitously. Closing of schools, limiting social gatherings, and pushing corporations to go to skeleton crews are going to have far-reaching consequences, including a negative impact on gasoline and the number of miles driven on our roadways.
The result of the market’s mindset is a massive drop in crude oil prices and all other soft commodities, such as corn. This combination is particularly deadly for the ethanol industry. As of this post, ethanol prices are the lowest since before the RFS was formally announced back in August 2005, nearby ethanol futures today falling below $1.00 per gallon.
According to some private analyst estimates, dry mill ethanol margins in many Corn Belt states are now running negative by $0.40 to $0.50 per bushel. This situation will put many dry mill ethanol operations in jeopardy of shutting down, with some locations possibly closing permanently if the economic meltdown persists.
Contact us to learn more about how this challenging time may impact corn prices and wet milling industry both short and long term.