Another Drought in 2013 could Devastate the US Ethanol Industry

Last year’s drought across the US is being felt by the ethanol industry as the corn scarcity has forced 20 ethanol plants to shut down.

The Renewable Fuels Association has released data showing that 20 of the 211 ethanol plants in operation in the US have had to cease production since the beginning of 2012; and they are unlikely to restart operation until after the 2013 corn harvest in August/September.

2012 was predicted to be a bumper year for corn producers, with many more acres than normal planted and record harvests predicted. Unfortunately the drought hit hardest in many of the top corn producing states and as a result 13% less corn was harvested than in 2011.

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Experts don’t expect much more impact to be felt in the industry other than the 20 sites that have already had to close. With millions of barrels of ethanol held in reserve and 191 plants still producing, they are confident that all will be back to normal by the end of the year.

That is unless the drought continues into this year as well, and again causes a disappointing corn crop.

Geoff Cooper, the vice president for research and analysis at the Renewable Fuels Association, said that, “there’s a lot of anxiety in the industry right now about the drought and a lot of folks watching the weather and hoping and praying this drought is going to break.

If we get back to a normal pattern and normal corn crop, then I think the industry is in good shape, but if this drought persists and it has the same effect on this coming corn crop, then we’ve got a problem.”

By. James Burgess of Oilprice.com