— Drought-driven high corn prices are putting the pinch on ethanol plants across the country, but so far haven’t caused area plants to idle as some have elsewhere.
The Guardian Energy plant in Janesville and the POET plant in Lake Crystal are both running normally, but no one is ready to predict what will come late this year and next year as a smaller than expected corn harvest comes in.
“Janesville is doing quite well,” said Randall Doyal, president of the board of directors that operates the plant. He is CEO of Al-Corn Clean Fuel in Claremont, part of the group of ethanol plants that owns the Janesville plant.
“There’s plenty of corn around now. You don’t like paying the price, but the corn’s there,” Doyal said. “After harvest we’re looking at a smaller crop than we were anticipating and it’s going to cause some serious headaches in getting the corn moved around.”
While corn prices will be high everywhere, Minnesota ethanol plants will benefit some from the fact the state’s corn harvest will be substantially better than in much of the Corn Belt. That availability of local corn means the plants won’t have to pay to ship corn a long distance as plants in other states may have to do.
The Lake Crystal ethanol plant started taking in new crop corn this week and is in full operation.
Matt Merritt, public relations manager for Sioux Falls-based POET, said the company has not idled any of its plants around the country. The privately held POET is one of the largest ethanol producers in the world.
He would not say if that could change but added, “POET’s been around 20 years. This isn’t the first drought we’ve been through. But it’s certainly a challenge.”
“Around Lake Crystal it’s not looking too bad. The yields are relatively good,” said Merritt of the corn delivered to the plant under contracts with area farmers.
He said POET focuses heavily on risk management to blunt the effects of spikes in corn prices. That is done, in part, by contracting for corn for the future when it is at lower prices as well as other hedging techniques.
The high corn prices have already caused a 15-20 percent reduction in ethanol production nationwide.
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