Commodity Online
NEW YORK: The Ethanol industry in US is under pressure as the persistent decline in the Crude Oil prices waned the demand for the commodity amid rising ethanol inventories. The ethanol prices fall from its 2008 high in 2009.

According to Don Hofstrand, a value added agriculture specialist and co-director of the U.S. Department of Agriculture’s Agricultural Marketing Resource Center, the ethanol prices now around $1.50 per gallon - have dropped by about $1 since last summer’s high.

He said the cost of producing ethanol has risen more than 20 cents per gallon since the fall of ‘05, “due mainly to the increased cost of producing corn.”

The revenue from ethanol production is currently only sufficient to cover the cost of producing Ethanol and its feedstock corn, he added, noting, “If ethanol prices continue to decline, significant losses will occur.”

“Current input prices indicate that the cost of producing Corn will rise substantially for the 2009 corn crop,” Hofstrand said. While some of this is due to higher farmland rental rates, most of it is due to higher fertilizer, seed and other input costs.”

Meanwhile, an industry outlook from the Iowa State University Cooperative Extension Service said, corn production costs and ethanol prices don’t portend great profits for farmers or fuel makers in 2009, but lower input costs could brighten the picture from the 2010 crop.

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