US Ethanol Price Curve to See a Hike in Next Quarter- Roles Played by Several Players

In the last week, the Ethanol markets have been trading at a cheaper rate due to the higher price gap between the downstream oil and feedstock corn prices. As of Aug. 4, the prices of the product have been hovering around USD 830 per MT in the USA on a FOB basis. According to sources, the developed North American market experienced strong growth despite a roughly 2 percent decline in U.S. Ethanol production in the first half of 2023. According to the report, the bioenergy segment also performed very well due to the adaptation of leading innovation technologies, corn-based Ethanol production capacity expansion, and growth in the biodiesel sector. Overall, intense growth has been impacted positively by pricing. Many of the factors will continue to support the pricing curve of the product throughout the rest of 2023.

As per the market data, there has been a decline of 2% in the U.S. Ethanol production in the week ending Aug. 4. Ethanol export has declined by 50%, while fuel Ethanol storage levels were up slightly. The Renewable fuel association is in the bull run to increase Ethanol production by adding a new member, CIE Norfolk, the biorefinery located in Norfolk, Nebraska. This Ethanol plant produces 55 million gallons of Ethanol per day. CIE acquired the Elkhorn Valley Ethanol plant late in 2022 from Louis Dreyfus to restructure its product production facilities. This deal will help in reshaping and expanding the Product market.

Moreover, Whitefox Technologies, which just made a small footprint in existing corn Ethanol production with its membrane dehydration technologies, have announced that Glacial Lakes Energy LLC  has agreed to start a partnership to increase their production capacity. With a global necessity towards net zero and carbon emission reduction, this project in the Ethanol plant of Mina, South Dakota, will assist in increasing production efficiency.

According to the forecast of the U.S. Energy Information Administration (EIA), the blending policies of Ethanol in Gasoline have been revised down. The prediction stated this year that the average Ethanol production in USA will be 1 million barrels per day and will increase by 1% next year. However, it is expected to see a downfall in the 4th quarter this year to fuel production of 9,90000 per day. On the other hand, fuel Ethanol blending with gasoline would average 930,000 per day this year but will surge by 1.07% to 940,000 barrels next year.

It is also expected to see growth in the sales of Second-generation Ethanol in the Latin American market. Growth in the bioenergy segment is also expected to contribute a significant percentage in the continued penetration of that fuel, higher yield, and downstream derivative value-capture in the favorable market environment.