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High Corn Prices Halt Ethanol Production In Indiana

Two of Indiana's largest ethanol plants have recently shut down because of a rapid increase in corn prices.

ethanol plant

Photo: Fred Thompson (Flickr)

The Lincolnway Energy plant in Iowa is one of multiple ethanol plants in the Midwest.

Two ethanol plants in Indiana have temporarily halted production because of high corn prices, reducing statewide output by nearly 600,000 gallons of ethanol per day. New Energy Corp and Valero Energy have stopped production at their ethanol plants in South Bend and the Montgomery County town of Linden.

Purdue University Extension agronomist Bob Nielsen says this summer’s drought has made the corn used to produce ethanol costly and sometimes hard to get.

“Corn yields have been reduced so dramatically, that the availability of the corn grain will be lower in some areas,” he says.

Valero spokesman Bill Day says it is the second time this year the company has shut down its plant in Indiana, a state where corn prices are higher than the national average. On top of that, Day says, there has been a reduction in demand.

“We’ve actually seen margin’s going negative on ethanol we are making at certain plants,” he says. “And by that I mean the plant is losing money on every gallon of ethanol it makes because the price of corn is higher than the product that we’re making.”

Day says he expects the market will improve next year. Nielsen agrees, though he adds that’s assuming the state sees average rainfall.

Gretchen Frazee contributed to this report.

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