Slumping Ethanol Price Hurts Producers

Ethanol profit margins continue to remain negative and show little sign of improving, as evidenced by DTN's hypothetical ethanol plant, which continues to suffer from low ethanol prices.Neeley Biofuels Inc., a hypothetical 50-million-gallon plant in South Dakota, saw little movement in its margin in the past month. Including debt service and depreciation, the plant continues to show a 34.4-cent-per-gallons loss, compared to a 34.5-cent-per-gallon loss last month.Most ethanol plants, however, are not paying debt service. Excluding debt and depreciation, Neeley Biofuels continues to show a 3-cent-per-gallon loss, which is unchanged from one month ago.Since our last update on Oct. 16, the corn price paid by the hypothetical plant dropped by 5 cents to $3.73 per bushel. The South Dakota rack price of ethanol received by the plant, however, remained unchanged at $1.37 per gallon.Donna Funk, a certified public accountant with K-Coe Isom based in Lenexa, Kansas, who works with ethanol plants, said the industry is struggling.