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Weak Demand Has Dozens of U.S. Ethanol Plants Idled, Others Cut Back

An estimated two dozen U.S. ethanol plants are idled, and a further two dozen have cut production due to weak demand, according to the Renewable Fuels Association (RFA).

Compounding the challenges being faced by ethanol producers, the corn market has been strengthening over the past month with prices recently spiking. This, together with the negative effects of the pandemic on fuel consumption, U.S. ethanol plants saw their margin dip into the negative in early December 2020.

Because of COVID-19, the RFA estimates that from March-November 2020 the ethanol industry saw a loss of $4 billion in revenue, and just as margins began to break even, the corn price rally is driving them negative once again.

Despite ethanol usage being weaker in the winter months, records indicate a slight increase in production for the week ending January 8. And hopes remain that with the help of vaccines consumption levels will return to pre-pandemic levels by this summer.

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