US ethanol industry margins, profit up despite corn price woe: new study

by Jim Lane, Biofuels Digest

In Minnesota, overall ethanol industry profitability gained by $0.08 per gallon in 2010, according to an annual benchmarking study released by Christianson & Associates. The study’s authors found that ethanol yields remained at an average of 2.725 gallons per bushel, and that plants reduced long term debt by an average of $0.20 per gallons.

Total revenue jumped from a low of $1.77 to $2.43 per gallon by Q4 as ethanol prices increased. In looking at feedstocks, the authors found that “ethanol prices and gasoline prices were more correlated to sugar prices over the past two years than other commodities.

“When breaking out the quarterly data correlation between 2009 and 2010 the results are quite revealing. Corn and ethanol were nearly perfectly correlated in 2010, but were negatively correlated in 2009. Sugar and gasoline actually were most correlated over the period than any other commodity pairing,” the authors wrote.

Our Take:
One of the unintended consequences of the protracted debate about the VEETC blenders’ credit is the impression among people without firsthand knowledge of the industry, that the ethanol industry is in trouble financially.

So here are a couple quick metrics that show the strength in the industry. At least for Minnesota (but we would venture that as MN goes, so goes the nation). Profits for ethanol producers have risen. Debt per gallon has fallen. Anyone predicting the end of corn ethanol is greatly overstating rumors of our demise.

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