Economists at the University of Illinois on March 26 published an analysis illustrating how COVID-19 is reducing demand for transportation fuels, including ethanol. Meanwhile, several plants have announced they will idle or reduce production.

The analysis, published by Economis Scott Irwin and Todd Hubbs, notes that the price of ethanol at the Iowa plant level has declined 26 percent, or 32 cents per gallon, since late February. Irwin and Hobbs used data on COVID-19 restrictions and statistics from the U.S. Energy Information Administration to estimate that U.S. ethanol consumption fell by 143 million gallons in March, and be down 391 million gallons in April and 207 gallons in May, for a total estimated reduction of 741 million gallons. At that level of reduction, corn use for ethanol would be reduced by 256 million bushels. Irwin and Hubbs also said that these projections should be viewed with considerable caution, as there is still great uncertainty about the path of the coronavirus pandemic and the length of restrictions necessary to contain the spread.

Lower demand for liquid transportation fuels, including ethanol, is already causing many plants to reduce production or idle. The Andersons announced on March 24 that it will idle its Element ethanol facility in Colwich, Kansas, for an extended maintenance and repair period and will take spring maintenance shutdowns at the four facilities owned by The Andersons Marathon Holdings LLC, a joint venture between The Andersons and Marathon Petroleum Corp.

Rex American Resources announced on March 26 that its NuGen Energy LLC facility in Marion, South Dakota, will be idle until threat of COVID-19 is reduced and margins increase. The company also said similar steps could be taken at the One Earth Energy plant in Gibson, Illinois, in the future.

Pacific Ethanol announced on March 27 that it will idle more than 60 percent of its ethanol production capacity by the end of March. Neil Koehler, president and CEO of Pacific Ethanol, didn’t specify which of the company’s plants would idle or reduce production, but said that production would be shut down in an orderly manner with the objective of meeting contractual commitments while minimizing negative cash impacts.

Siouxland Ethanol has posted a notice to its website that its facility in Jackson, Nebraska, will suspend ethanol production beginning in April 2020. “The negative impact of the COVID-19 pandemic on gasoline and ethanol demand in the United States is severe,” said Nick Bowdish, president and CEO of Siouxland Ethanol, in the notice. “Our company anticipates that total U.S. fuel ethanol production needs to be reduced by at least 50 percent until gasoline demand recovers.”

“While we pride ourselves on being an efficient producer of ethanol, we anticipate that fully suspending production is prudent,” Bowdish continued. “We intend to keep our balance sheet and financial position strong, our employees intact, and we look forward to resuming production as soon as economic circumstances allow.”

A document filed with the U.S. Securities and Exchange Commission on March 18 indicates that Heron Lake Bioenergy LLC’s board of directors had determined that it is in the best interest of the company to idle the plant, which is located in Huron Lake, Minnesota. The shutdown is expected to begin on or around March 30 and continue until the completion of the plant’s regulatory scheduled annual temporary shutdown of April 29.

Heron Lake Bioenergy also owns 50.7 percent of the Granite Falls Energy ethanol plant, located in Granite Falls, Minnesota. The company’s board of directors filed a notice with the SEC on March 19 announcing that HLBE will also idle its operations on or about March 30 and continuing until the completion of the plant’s regularly scheduled annual temporary shutdown of April 29.

Cardinal Ethanol LLC, which operates an ethanol plant in Union City, Indiana, filed a notice with the SEC on March 23 announcing its will reduce production by approximately 20 percent for the foreseeable future. The facility had previously been operating at a capacity of 140 MMgy.

Highwater Ethanol LLC made a similar filing on March 23, announcing it will cut production at its plant in Lamberton, Minnesota, by 20 percent. That facility had been operating at a rate of 67 MMgy.

Production has likely been reduced or idled at many more of the nation’s 200 ethanol plants. Ethanol production data released by the EIA in the upcoming weeks is expected to give a more complete picture of how COVID-19 is impacting the ethanol industry.