lynngrae | Getty Images Signature

Ingredion Nixes Ethanol at Oldest US Biofuel Plant

A rising tide may raise all ships, but rising corn prices are forcing some ethanol producers to consider abandoning ship. Just ask Ingredion.

The ingredient giant announced this week it will end ethanol production at its Cedar Rapids, IA facility. A letter sent to suppliers made the reasoning plain as day: Gas demand is too low and corn prices are too high.

By the numbers:

→ US Energy Information Administration (EIA) reports 2020 ethanol production averaged 900,000 barrels/day, a 13% drop from 2019.
→ Even as production returned to 87% of the 3-year average after the initial COVID-19 shock, EIA data reveals demand is not recovering to pre-pandemic levels.
→ US corn prices continue to hover around $5, a welcome sign for farmers but another hole in the ship for ethanol.

Where this goes: Gasoline demand is unlikely to increase anytime soon as winter sets in. And turmoil in the Argentina corn export market plus dry South American weather will keep corn prices high. Unless next week’s WASDE report slows market momentum, don’t expect ethanol execs to put away the life vests for now.
+ On the bright side: Not all is lost. The 126-year-old facility in Cedar Rapids has survived fires, floods, and recessions. Ingredion plans to continue producing corn-based industrial goods on the premises.