Plunging ethanol prices worries Corn Belt

A plunge in ethanol prices has added to the anxiety in the Corn Belt.

The weekly spot price for ethanol in Iowa fell to $1.27 a gallon in the middle of January, from $2.42 at the end of November, according to Scott Irwin, an agricultural economist at the University of Illinois.

“That was the lowest price I have seen since I started tracking ethanol prices in 2007,” Irwin said.

At prices that low, profits have evaporated for ethanol producers. If producers slash output in response to weaker profit margins, they will use less corn and already depressed corn prices could fall even more. More than a third of the nation’s corn supply is used to make ethanol.

Corn growers were hoping ethanol production would increase this year after makers of the renewable fuel enjoyed some of the best profit margins in years in 2014. Ethanol helped profits grow 46 percent in Archer Daniels Midland’s corn-processing division.