The ethanol industry’s long road to recovery

An ag economist says recovery to the ethanol industry continues to face an uphill climb following the disruptions from the coronavirus pandemic.

Dr. Michael Swanson with Wells Fargo says ethanol consumption is still running about 10 percent below year-ago levels, but he expects it to come back.  “As we see a reopening of the economy and we’re seeing good rollout of the vaccines as they come along every single month,” he says.  “That’s going to be positive for the ethanol utilization and we’re also going to see them spin up production, which is good for corn demand.”

He tells Brownfield exports of ethanol present opportunity for the market – at least in the short term.  “When we price ethanol at this price point, the Chinese look at it as a good value,” he says.  “They know it’s a good option to improve air quality in a lot of ways.”

While near-term forecasts are more positive, Swanson says he’s still concerned about the potential impact of electric vehicles on the market in the next 5 to 10 years.  “We’re seeing a lot of investment globally so it’s going to roll out faster than people would have said five years ago,” he says.  “Now once you see the writing on the wall it’s too late to do something about it.  You just can’t beat a better technology and I think the industry needs to understand that and be ready to adapt to that.”

According to the latest data from the US Energy Information Administration, US ethanol stocks have reached their highest levels since May 2020.

AUDIO: Michael Swanson, Wells Fargo

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