From reduced travel to trade deal with China, coronavirus expected to take a toll on ethanol industry

Meteorologist Andrew Pritchard discusses the weather at last Wednesday’s Dewey Bank farmers breakfast. Pritchard predicts another wet spring like last year’s. 

DEWEY — If America grinds to a halt because of the coronavirus, farmers could see lower corn prices, a University of Illinois agricultural economist told farmers in Dewey.

Nearly 40 percent of U.S. corn is used for ethanol, which is in every gallon of gasoline drivers use, so any disruption to that market can affect farmers.

“It sounds like we’re going to be staying in place. People aren’t going to be traveling as much. People aren’t going to be going out as much,” Todd Hubbs said at the annual Dewey Bank farmers breakfast.

To make up for a drop in ethanol demand, he said exports would need to increase, which isn’t expected.

“If this coronavirus thing is the true problem it sounds like, we need ethanol exports to be higher. The problem is, through January by my calculation, we’re about 80 million gallons behind last year,” he said.

On top of that, Hubbs said, “Our biggest market, Brazil, has been starting their own corn ethanol industry.”

The coronavirus is also impacting farmers indirectly because as part of the Phase One Trade Deal reached in January, China was planning to buy about $36.5 billion in agricultural products from the U.S. this year.

FFA kid Dewey Bank breakfast

Dewey Bank Executive Vice President Tony Bradbury presented a $250 check to Fisher FFA at last week’s Dewey Bank farmers breakfast.  FFA members are, from left, Jacob Hansens, Felicity Schaffer, Dominic Casten, Lacey Cotter and Will Shook.

“They bought $1.4 billion in January. You don’t have to be a mathematician to realize that’s not on pace. And they didn’t buy much in February either. Now, the coronavirus probably has a lot to do with it,” he said. “I do think they’re going to come in strong, but it’s going to be later in 2020.”

Hubbs also discussed longer-term problems that could hurt the ethanol industry, in particular electric vehicles.

“My other worry domestically, particularly for corn, is in the ethanol space. It feels like these EVs are coming. I don’t know how fast,” he said. “But in 10 years we could see having a fleet being electric vehicles. That’s a lot less gas.”

But he said that for now, farmers have more pressing issues.

“Don’t get worried about that,” he said. “We’ve got to get through this year first.”