Ethanol Blog

Minnesota Ethanol Plant Stopping Production During Market Uncertainty

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Ethanol plants continue to struggle as a result of difficult market conditions. (DTN file photo)

While U.S. Secretary of Agriculture Sonny Perdue indicated on Wednesday during the Farm Progress Show in Decatur, Illinois, that President Donald Trump is expected to make an announcement regarding federal biofuels policy, yet another ethanol company has announced plans to shut down production.

KEYC television in Mankato, Minnesota, reported on Wednesday, https://www.keyc.com/…, that the 51-million-gallon plant is struggling in the current commodity market. Overall, more than 15 ethanol plants have shut down in recent months, while many others have cut production. The waivers have had a negative effect on biodiesel plants as well, a number of which have stopped production.

The latest numbers from the U.S. Energy Information Administration shows that cuts in ethanol production are leading to some of the lowest ethanol stocks in weeks. Ethanol stocks dipped by 1.6% to an eight-week low of 23 million barrels, according to the latest EIA numbers released on Wednesday.

One of the nation's largest ethanol producers, POET, LLC, announced recently it was closing its 92-million-gallon Cloverdale, Indiana, plant, and had slashed production at about half of its 28 plants, https://www.dtnpf.com/…. The company said in a news release its latest closer came as a result of the latest round of 31 small-refinery waivers granted.

The ethanol industry continues to navigate a low- to negative-margin environment, as a result of low ethanol prices and other market factors. In addition, industry officials have indicated 85 small-refinery waivers issued by the EPA since 2016 has hurt demand. By EPA's own estimates, those waivers have removed about 4.03 billion gallons of biofuels from the petroleum market.

Earlier this week, a group of seven Democratic senators asked EPA Administrator Andrew Wheeler to stop granting small-refinery waivers.

In a letter written by Sens. Tina Smith, Debbie Stabenow, Richard Durbin, Gary Peters, Tammy Baldwin, Sherrod Brown and Amy Klobuchar, https://www.stabenow.senate.gov/…, they outline the economic difficulties rural America faces as a result of the waivers.

"This pattern of demand destruction is wreaking havoc on our nation's rural economy," they said in the letter to Wheeler. "In recent months, more than 13 ethanol plants and eight biodiesel plants have idled production or shut down across the country. Not only did these biofuel plants support thousands of rural jobs across the country, they served as important markets for farmers, processing millions of bushels of corn, soybeans, and other commodities. At a time when farmers are already struggling after years of low prices and a chaotic trade agenda, this administration chose to destroy more markets for farmers and harm rural communities across the country.

"To add insult to injury, recent reports indicate that President Trump personally made the decision to grant these 31 waivers, despite numerous promises to support renewable fuels. EPA continues to undercut the integrity of the RFS by misusing its waiver authority, which in turn has a direct adverse impact on farmers and jobs in rural communities. We write to urge you once again to end the abuse of these small-refinery exemptions, immediately reallocate the remaining gallons, and make public information regarding any recipients of these exemptions."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow me on Twitter @toddneeleyDTN

(TN)

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