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Will ethanol plants start idling facilities?

Kevin Van Trump, Founder

December 19, 2018

2 Min Read
Kenneth Schulze/iStock/Thinkstock

I've heard all kinds of rumors and talk that the Chinese could soon purchase anywhere from 2 to 4 MMTs of U.S. corn, and also make purchases of U.S. ethanol, DDGs, and sorghum. Unfortunately, to this point it's just all been talk, I've seen nothing official. Keep in mind, the last time China purchased any real significant amount of U.S. corn was around 3 MMTs in 2013. This has the bears starting to more heavily question the rumors.

The bears are also thinking U.S. and Chinese negotiations might be cooling off bit? The question now is how long can the bulls go without being feed fresh new demand headlines? We also have to remember that crude oil prices have been getting hammered as of late, down about -12% in just the past three sessions.

There are also more headlines of U.S. ethanol plants making closures and or idling facilities. There was talk circulating yesterday that Green Plains plans to idle the 55 million gallon a year at their Otter Tail ethanol plant in Fergus Falls, Minnesota.

Remember, the USDA just recently trimmed their corn used for ethanol estimate by -50 million bushels, let's hope they don't have to cut more from the forecast. Export competition from South America is also becoming more widely discussed and debated. Bottom-line, growth in demand is being more heavily questioned. On the supply-side of the equation, I could argue the U.S. crop has gotten a bit smaller as some rough weather has kept some acres from getting harvested in a timely fashion.

To learn more about the weather concerns popping up in South America click here to receive a 30 day free trial to my daily report.

The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.

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About the Author(s)

Kevin Van Trump

Founder, Farmdirection.com

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead. 

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