White Energy Inc., a U.S. ethanol producer, idled a distillery in Plainview, Texas, because of high corn prices.
The plant will be shut until corn prices drop or as long as nine months after this year’s harvest in September, Ron Dunbar, White Energy’s vice president of ethanol operations, said today by telephone. Its capacity is 120 million gallons a year.
Producers including Valero Energy Corp. (VLO), Abengoa SA (ABG) and Poet LLC have been cutting output because of record corn prices caused by the worst drought since the 1930s. Ethanol production in the fourth quarter of 2012 was down 12 percent from the previous year, according to government data.
“The whole ethanol industry right now is fighting with margins,” Dunbar said.
Denatured ethanol for February delivery rose 0.7 cent, or 0.3 percent, to $2.41 a gallon at 1:45 p.m. on the Chicago Board of Trade. Prices have gained 9.7 percent in the past year.
That hasn’t been enough to keep pace with corn, the primary feedstock used to make the fuel in the U.S., which has gained 25 percent in the past year. Corn for March delivery rose 1.75 cents to $7.31 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
Based on March contracts for corn and ethanol, producers are losing 23 cents on each gallon of the fuel made, unchanged from yesterday, according to data compiled by Bloomberg. The figures exclude the revenue that can be made from the sale of dried distillers’ grains, a byproduct of ethanol production that can be fed to livestock.
Dunbar said White’s plant in Hereford, Texas, is manufacturing below its 45 million-gallon-a-year capacity.
Valero, the world’s largest independent refinery by processing capacity and the third-biggest U.S. ethanol producer, said today that it operated its plants at reduced rates during the fourth quarter and that it idled three mills.
Poet, the second-largest U.S. ethanol maker, said Jan. 25 that it will suspend output at its Macon, Missouri, distillery on Feb. 1, because there isn’t enough corn available.
Abengoa, a Spanish engineering and renewable energy company, said Jan. 16 it halted production at its plants in York and Ravenna, Nebraska, until market conditions improve.
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