The cost of corn has gone up nationally, but the price of ethanol and dried distillers grains have not followed suit. Advance Trading risk management consultant Ben Peters says that has squeezed margins for ethanol plants. Specifically, ethanol plants in the Eastern Corn Belt are slowing down their grind. “Not just because the margins are tight, but because the supply of corn is not available. Farmers were trying to plant a crop and that was a long window.” That has pushed the local basis higher, with north central Indiana at 25 to 30 cents. Some parts of northwest Ohio are at 55 to 60 cents over. Will those ethanol plants continue to operate with those costs? “That’s the ultimate question,” says Peters. “At some point, the plants will start to shut down. However, the refineries still need an oxygenate and ethanol will need to come up at some point.”
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