Analysts see COVID-19 driving major ethanol industry consolidation

In Illinois, Brownfield Ag News reports two commodity analysts predict the COVID-19 pandemic and its aftermath will force significant consolidation in the ethanol industry that will lead to permanent closures. One said that with many ethanol plants getting near 3 gallons of ethanol per bushel, those that are less efficient, getting less than 2.8 gallons per bushel will likely close and never reopen under current configurations. The shelter in place orders across the US as a result of the pandemic has significantly cut gasoline, and therefore, ethanol demand which together with record low oil prices has led to a perfect storm of negative margins that forced production to shrink by half in the last few months.