CoBank maintained its positive outlook for U.S. ethanol production in its latest Quarterly Research Report, released July 11, with higher margins and a strong export market continuing to benefit ethanol producers. 

According to CoBank, sustained lower corn and natural gas prices have helped boost ethanol margins. Well-managed facilities will continue to take advantage of the higher margin environment in the months ahead, the report predicts. 

The recent narrowing of the ethanol price discount to gasoline could affect price-sensitive markets, CoBank said in the report, but noted that the summer driving season does help offset some price challenges.

While domestic ethanol demand has tracked lower in tandem with decreased gasoline demand in recent months, export demand has been strong. Within the report, CoBank cites the USDA’s May forecast that 2024 fuel ethanol exports could reach $4 billion this year, matching the fiscal year 2022 record.

CoBank’s report also addresses the outlook for corn, explaining that the USDA shocked the market at the end of June with higher-than-expected totals on corn acreage and stocks. Planted corn acreage is up nearly 2% when compared to data gathered as part of the USDA’s March Prospective Plantings survey. Corn stocks were also well above expectations. CoBank said the larger planted acreage and higher stocks should provide some cushion against potential production losses from widespread floods that occurred across Iowa, Minnesota and South Dakota in June. In addition to flooding, the U.S. corn crop also risks yield losses form expected extreme heat this summer. 

A full copy of the report is available on the CoBank website.

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