The low corn price and policy uncertainty can be felt in the ethanol market.
“It’s very frustrating,” said Nick Bowdish, president and CEO of Elite Octane in Atlantic, Iowa. “… Because the Trump administration has not approved the Reid vapor pressure waiver for the 15 percent blend of ethanol, the amount of ethanol that has built up here has caused the ethanol price to diminish greatly.”
With two of the “largest tin cans in the world”— two Sukup bins 156 feet in diameter and 165 feet tall at their peak that will each hold 2 million bushels of corn — Bowdish and Elite Octane are preparing for their first harvest season in operation.
Elite Octane opened its doors in June and began plant operations in July.
“A 2-million bushel bin for a lot of operations would be an enormous storage space,” Bowdish said. “With the size and scale of our ethanol plant, that bin is about two weeks of corn grind. When we build two of these things, we have about 30 days of storage ahead of our grinders.
“What I’ve found over the years, to have a good efficient operation, 30 days of what a plant grinds is what I see as a minimum amount of space for what a facility would want. If you don’t have that space, you have to manage things much tighter.”
Bowdish said the recent talk regarding ethanol hasn’t been encouraging. With that, he said profits have been lower for the ethanol industry.
“Right now, most of these ethanol plants are able to generate a little bit of positive earnings on the cheap corn price, but the ethanol price at $1.15 per gallon is as cheap as we’ve seen in nearly 15 years,” he said.
However, despite the tough markets, Bowdish said he will still be offering competitive prices to corn farmers selling to his plant.
“We are trying to have a good competitive steady bid day in and day out, and because of the amount of corn we grind, it’s not reality that we can ever post a cheap corn price relative to our competition,” Bowdish said. “We always have to have a competitive bid. Typically, our bid is 10 to 15 cents per bushel more than the local grain elevator.”