Rabobank’s ethanol outlook less optimistic than USDA


Rabobank’s ethanol outlook less optimistic than USDA

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An analyst with Rabobank says the ethanol industry will likely need time to recover from the impact of coronavirus.

Erin Fitzpatrick says, “I think we are a little bit less optimistic of what the recovery is going to look like than USDA is at the moment.”

Fitzpatrick tells Brownfield the ethanol industry was facing challenging times before the coronavirus pandemic and looking at both the 2020 and 2021 crop years, she says the USDA’s current ethanol projections are Rabobank’s best-case scenarios. 

Fitzpatrick says the industry is coming back after losing almost 50% year-on-year demand during the peak of the pandemic. “The latest weekly numbers were down 22% year-on-year which is still a significant drop so, you know we’ve found the bottom. People are starting to drive more as the economy opens up, but they’re still driving a lot less than they were normally.”

And, Fitzpatrick says some ethanol plants will make changes or shut down. “We’re probably going to continue to see some of them producing hand sanitizer, maybe looking at other types of industrial products they can produce. And also, there’s probably going to be some consolidation within that particular sector.”

Fitzpatrick says she doesn’t anticipate any worries corn growers haven’t already seen.

Fitzpatrick says she expects the U.S. to have a slow recovery from the pandemic, which will reduce the overall demand for gasoline and ethanol and many workers and students will continue to do some of their tasks at home.

The Rabobank ethanol report is available online through Rabo Agrifinance and their local banks.

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