Market conditions force two Nebraska ethanol plants to suspend production

US-based oil refiners Valero Energy (VE) and ethanol producers Nedak Ethanol (NE) have both temporarily closed their ethanol plants in Nebraska recently.

VE spokesman Bill Day cited ‘poor profit margins’ returned by its facility, which produces up to 110 million gallons of biofuel annually, as the reason behind the suspension. There were no signs that VE’s other nine ethanol plants would suffer a similar fate.

‘We started this organised shutdown because of poor margins in the ethanol industry,’ adds Day. ‘Corn prices have gone up and ethanol margins have gone down. Corn basis levels are high.’

The US Agriculture Department has forecast corn supplies to hit a 16-year low by the end of this summer.

NE has also suspended ethanol production in Nebraska so it can monitor the corn and ethanol markets while conducting its regular spring maintenance.

‘The early months of the year usually have fewer miles driven by consumers, which reduces the demand for gasoline and ethanol,’ says NE president Jerome Fagerland. ‘Normally consumer driving increases by the Memorial Day holiday but it has been less so this year. We are also experiencing a much stronger local basis for current corn deliveries, resulting in relatively higher local corn prices.’

NE is still determining what impact the halt in production will have on its workforce and whether or not redundancies will have to be made, but Fagerland is confident his plant ‘will resume production soon’.