The cost of corn has gone up nationally, but price of ethanol and DDGs 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 Cornbelt are slowing down their grind. That has pushed the local basis higher with northcentral Indiana at 25-to-30 cents over and there are some parts of northwest Ohio at 55-to-60 cents over. Will those ethanol plants continue to operate with those costs? Peters says the red ink will force some plants to slow down or shut down. “Even though ethanol becomes an expensive fuel additive, the refiners still need to provide an oxygenate. That is a benefit that ethanol provides so at some point ethanol (prices) will have to come up.”
