The market appears to be getting accustomed to ethanol production setting records month after month. In fact, ethanol production for the month of August was up 4.5 percent from output last year. Strong margins have encouraged production due to cheap corn and rising energy prices. As a result, however, the market seems to be flooded with ethanol, which has led to ethanol futures dropping.
Distillers grains pricing is down as the former top importer, China, lowered its consumption rapidly following the imposition of tariffs on U.S. distillers grains and ethanol in March 2017. China’s tariffs were based on allegations of unfair subsidies for U.S. corn. China could potentially buy surplus ethanol to help meet the ethanol blending mandate announced a year ago, but this is unlikely while tariffs remain in place.
Corn utilized for ethanol