Ethanol Production Begins Comeback
Ethanol production in the U.S. is beginning to return
after bottoming out in June and July. As producers begin to restart facilities,
due to lower corn prices and increasing demand, the industry is expected to be
running at about 70 percent of capacity.
In June and July, U.S. ethanol
production seemed to hit bottom at 39,000 barrels per day or just under 600
million gallons per year on an annualized basis. Production has been falling for
virtually all of 1996. Total production capacity in the U.S. is about 1.6
billion gallons per year.
Of the plants that closed or cutback
production, most are expected to be back at almost full capacity by Oct. 1,
1996. This will ensure product is available for the bulk of the oxygenated fuel
season, which begins in October and November. With the return to operation of
many plants, ethanol production is expected to be back in the 70,000 barrels per
day range in October, according to projections by Information
Resources.
Several ethanol producers have already announced their return
to the market.
For instance, Archer Daniels Midland will bring its almost
900 million gallons per year of production capacity on-line "sometime this
fall," according to a company spokesperson. However, this will probably not
include its 28-million-gallon-per-year facility in Walhalla, North Dakota, which
was one of the first to close its doors when corn prices began
escalating.
High Plains announced its Colwich, Kansas plant began
operations Sept. 15. Grain deliveries at an initial cost of $3.00 per bushel
have begun, and High Plains expects to manufacture fuel- grade ethanol there at
the full production rate of 20 million gallons per year. Production of fuel-
grade ethanol at the York, Nebraska, plant also expected to be up and running
shortly. The harvest of grain at York is slightly behind the Kansas harvest, but
like the Kansas corn and milo harvest, it is expected to yield record or
near-record crops.
Pekin Energy has returned its 100 million gallons per
year plant from its maintenance turnaround. The company stopped operation in
early-August.
Midwest Grain Products has already brought its 6 million
gallons per year Atchison, Kansas, plant back to full production and is
utilizing about 65 percent of its fuel ethanol capacity.
