CoBank: 2021 outlook for ethanol is stable but guarded

By Erin Voegele | December 22, 2020

CoBank on Dec. 17 issued a report on the year ahead, predicting the 2021 outlook for ethanol is stable but guarded, with considerable growth and margin opportunities favoring ethanol coproducts versus fuel.

The report, published by CoBank’s Knowledge Exchange division, examines 10 key factors that will shape agriculture and market sectors that serve rural communities throughout the U.S.

The report notes the ethanol industry experienced a nearly 50 percent reduction in demand last spring due to the COVID-19 pandemic. To date, fuel ethanol in the U.S. has recovered to about 90 percent of pre-COVID levels, CoBank said, equating to average annualized production of 14.6 billion gallons.

Moving into 2021, CoBank predicts that ethanol operating margins could compress below the monthly estimated moving average of 20 cents to 23 cents per gallon due to rising corn prices. The other lingering near-term risk factor relates to the recent uptick in positive COVID-19 cases, the report said, which could reduce demand again if shelter-in-place restrictions return.

A full copy of the report can be downloaded from the CoBank website.