January 17, 2022
BY Erin Krueger
The ethanol industry entered 2022 with considerable momentum after profit margins rose to all-time records during the fourth quarter, according to CoBank’s latest Quarterly Research Report, released in January. Several risks, however, are expected to emerge during the first half of 2022.
The report shows that ethanol production surged above pre-COVID levels during the fourth quarter of 2021, delivering a massive profit margin surge. CoBank said strong consumer demand, higher ethanol prices, and sharply falling natural gas prices offset a modest rise in corn prices during the quarter, noting that fourth quarter profit margins rose to all-time records, currently averaging $1.34 per gallon. Daily operating margins peaked at $1.55 per gallon in late November, according to CoBank.
Despite the momentum with which the ethanol industry has entered 2022, CoBank said it sees several risks emerging over the next six months, including overproduction prompted by current extreme profitability, higher financing costs as the Federal Reserve raises benchmark interest rate targets, and possible economic shocks and/or demand volatility from the omicron variant. In addition, the global transition toward electric vehicles, urbanization, ride-sharing and remote work were identified as long-term challenges that collectively decrease fuel vehicle miles driven.
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A full copy of the report is available on the CoBank website.
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The U.S. Energy Information Administration maintained its forecast for 2025 and 2026 biodiesel, renewable diesel and sustainable aviation fuel (SAF) production in its latest Short-Term Energy Outlook, released July 8.
XCF Global Inc. on July 10 shared its strategic plan to invest close to $1 billion in developing a network of SAF production facilities, expanding its U.S. footprint, and advancing its international growth strategy.
U.S. fuel ethanol capacity fell slightly in April, while biodiesel and renewable diesel capacity held steady, according to data released by the U.S. EIA on June 30. Feedstock consumption was down when compared to the previous month.
XCF Global Inc. on July 8 provided a production update on its flagship New Rise Reno facility, underscoring that the plant has successfully produced SAF, renewable diesel, and renewable naphtha during its initial ramp-up.
The U.S. EPA on July 8 hosted virtual public hearing to gather input on the agency’s recently released proposed rule to set 2026 and 2027 RFS RVOs. Members of the biofuel industry were among those to offer testimony during the event.