Industrial ethanol price hike proposed on low US corn yields

13 September 2011 18:10  [Source: ICIS news]

HOUSTON (ICIS)--The US Department of Agriculture’s (USDA) reduced corn outlook has already led one industrial ethanol producer to raise October contract prices on Tuesday.

Archer Daniels Midland (ADM) said in a letter to customers that it will increase all of its industrial ethanol prices by 25 cents/gal, effective on 1 October or as contracts allow.

The company said with the release of Monday’s USDA report, it was clear that there will be no relief in corn prices over the coming months.

The national average corn yield is forecasted at 148.1 bushels/acre, down by 4.9 bushels/acre from August and 16.6 bushels/acre from 2009/10. The forecasted yield would be the lowest since 2005/06.

ADM’s increase follows MGP Ingredients announcement a week earlier that it would also seek a 25 cent/gal increase on industrial ethanol contracts, effective on 1 October.

MGP Ingredients said the increase was caused by the continued high cost of corn and projected low carry-out inventories that have increased prices over the past six months.

Buyer reaction to the price increases so far has been minimal.

One buyer said it does not think the full 25 cent/gal increase will pass through, but some of it would.

($1 = €0.74)

For more on ethanol visit ICIS chemical intelligence

By: Brian Balboa
+1 713 525 2653

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