Flooding impacts Iowa ethanol

By Susanne Retka Schill | June 02, 2008
Web exclusive posted June 17, 2008 at 10:58 a.m. CST

The Iowa Renewable Fuels Association estimated that as of June 13, several ethanol plants with a total capacity of 300 MMgy were offline in Iowa as a result of flooding. For three weeks the nation's top ethanol- and corn-producing state has been inundated with rain, which is causing record flooding along many of the state's rivers. Reporting stations in the central northeast, east central and central regions reported six to eight inches of rain above normal during the first two weeks of June when total rainfall reports of 10 inches were reported in Des Moines and Mason City, and more than 8 inches in Waterloo and Ames.

IRFA said its estimate was not a hard number since it was not able to contact every facility, nor independently verify field reports. "If predictions of river cresting into early next week prove correct, that number could grow to over 400 million gallons," said Monte Shaw, executive director of IRFA. "Given the inherent flexibility of biofuels distribution by rail, truck, barge, no plants have reported an inability to ship fuel to destination markets. However, railroad operations have been greatly impacted by the flooding. Delays are widespread and at least one bridge has collapsed on a rail line that services several ethanol plants."

Indeed, the IRFA numbers could not have included the 420 MMgy capacity of the Archer Daniels Midland Co. corn processing facility at Cedar Rapids, Iowa. The company reported on June 13 that the Cedar Rapids plant was temporarily closed due to local water use constraints. Other facilities in the region are releasing staff to assist with local sandbagging efforts where needed, said David Weintraub, ADM director of external communications. The company is leveraging the geographic breadth of its operating facilities to meet customer needs, he added. "Throughout our operations in the Midwest, we are experiencing constrained logistics because of the closure of railways, roadways and the Upper Mississippi River. The flexibility offered by our transportation network is helping us overcome some of those limitations."

On reports of widespread flooding, the December corn contract surged to $7.88 Monday. "Perhaps the biggest impact on biofuels producers from the floods has been the dramatic escalation in commodity prices," Shaw said.

The extent of the damage to the corn won't be known immediately, but Iowa State University extension agronomist Roger Elmore has heard reports of reduced stand up to two-thirds. Any fields replanted to shorter season corn varieties within the next couple of weeks would be expected to yield half to two-thirds of a normal yield potential, he said. "When you mention those numbers, farmers will say with $5 and $6 corn, this still could pencil out." A survey of corn seed dealers indicates there should be an adequate supply of 90 and 100 day corn available for reseeding.