Ethanol’s Growth Path: Output and Export Uncertainties Both Rising

By Tanner Ehmke

August 17, 2017

Key Points

  • Given the sizable expansion in ethanol production capacity and only mediocre growth in demand, a market correction for ethanol is anticipated in the next year to two years. However, this correction will be less severe than that of 2012-13.
  • Producers are investing in new technology, making them more cost efficient and enabling greater flexibility to endure prolonged periods of higher costs or lower revenues.
  • Many ethanol plants enjoy a very favorable cash position following recent profits. Financially weaker and less efficient producers, though, risk being consolidated. More idling of production – particularly with destination plants – is expected in the next 18-24 months, and aging facilities could be retired.

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