corn ethanol

The US corn ethanol industry is struggling, now that Midwest floods have washed out millions of acres of prime cropland, sending corn prices soaring and ethanol profits falling. If this statement by Citigroup is anything to go by, then it could be even worse than feared.

As quoted in MarketWatch:

As a result of the rapid margin deterioration, nearly 120 small to midsize ethanol producers "will be shut down over the next few months," said David Driscoll, an analyst at Citigroup, in a written comment released Thursday. There are currently about 160 ethanol plants in the United States, according to the Renewable Fuels Association.

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Louisiana Green Fuels (LGF), a Colombia Business Group, is taking a step that a lot of people in the ethanol industry will be watching carefully: It’s opening America’s first commercial-scale sugar ethanol plant in Louisiana next year.

Interesting to read the round-up of reactions.

"The saving grace for sugarcane farmers..." The Daily Advertiser

"A landmark moment in southern Louisiana..." The Miami Herald

"A good experiment for the American ethanol industry." Earth2Tech

Amazing how things change.

The unintended consequences of corn ethanol, part XXV:

Farmers are dropping out of the USDA’s Conservation Reserve Program (CRP) in growing numbers, choosing to put their fallow acres back to work instead of conserving them.

Why? The temptation for profits, courtesy of America's biofuels boom.

Each summer an oxygen-starved, lifeless “dead zone” swells in the Gulf of Mexico from the toxic nitrogen fertilizer that runs off farms in Midwestern corn country.

But now that dead zone is expanding -- dangerously. And it’s starting to put the health of a nearly $3 billion fishing industry and an entire ecosystem of aquatic life at risk.

Last year the dead zone covered an area the size of New Jersey -- 7,700 square miles.

The culprit? The USA’s corn ethanol boom. That’s the conclusion of new research published in the Proceedings of the National Journal of Sciences.