Ethanol Markets Under Pressure from Surplus Capacity and Static Pricing

Distillery Viability in Question

While raw material costs for sugar and grain have risen by nearly 17%, ethanol purchase prices have remained static. This is squeezing margins for producers who are already dealing with a domestic surplus of co-products and anhydrous ethanol.

Brazil Export Advantage

Brazilian anhydrous ethanol prices rose this week to $2.33/gal, widening the spread against U.S. Gulf supplies. This has made U.S. ethanol more competitive on a cost-and-freight basis to Central America and Southeast Asia, supporting a marginal uptick in export volumes.