Overview of Ethanol in the Ag.
Economy
Chad Hart
Center for Agricultural and Rural Development
Iowa State University
E-mail: chart@iastate.edu
May 14, 2008
Biofuels and the Rural Economy
The Center for Towncraft
Perry, Iowa
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
Billion Gallons
7
Ethanol Expansion
6
5
4
3
2
1
0
Source: Renewable Fuels Association
500
Biodiesel Growth
450
Million Gallons
400
350
300
250
200
150
100
50
0
1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: National Biodiesel Board
Ethanol Industry Snapshots
Ethanol Plants
Capacity (mgy)
Jan. 2000
54
1,749
Jan. 2001
56
1,921
Jan. 2002
61
2,347
Jan. 2003
68
2,707
Jan. 2004
72
3,101
Jan. 2005
81
3,644
Jan. 2006
95
4,336
Jan. 2007
110
5,493
Jan. 2008
139
7,888
Source: Renewable Fuels Association
U.S. Ethanol Industry
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Expansions/New Construction
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Currently in Production
Current ethanol capacity:
169 plants, 9.2 billion
gallons/year
Total capacity under
construction and expansion:
5.7 billion gallons/year
71 new ethanol plants and
expansion projects underway
(some projects are
suspended)
2.117 billion bushels of corn were used in producing fuel ethanol in 2006/2007 marketing year.
3 billion bushels of corn are expected to be used in producing fuel ethanol for 2007/2008 marketing
year.
4 billion bushels of corn are expected to be used in producing fuel ethanol for 2008/2009 marketing
year.
Ethanol – State by State
State
IA
NE
IL
MN
IN
SD
KS
OH
WI
TX
Current Capacity
2102
1308
1034
748
552
839
463.5
405
517
140
Being Built
(million gallons)
1710
830
237
400
577
168
115
145
0
245
Total
3812
2138
1271
1148
1129
1007
578.5
550
517
385
U.S. Biodiesel Industry
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Currently in Production
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Current biodiesel capacity:
221 plants, 2.59 billion
gallons/year
Total capacity under
construction and expansion:
1.34 billion gallons/year
77 new plants underway
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2.8 billion pounds of soybean oil was used in producing biodiesel in 2006/2007 marketing year.
2.95 billion pounds of soybean oil are expected to be used in producing biodiesel for 2007/2008
marketing year.
3.2 billion pounds of soybean oil are expected to be used in producing biodiesel for 2008/2009
marketing year.
Biodiesel – State by State
State
TX
IA
WA
MO
IL
AL
NJ
IN
GA
MS
Current Capacity
348
349
131
125
99
95
90
121
94
126
Being Built
(million gallons)
418
5
114
98
106
60
60
15
42
0
Total
766
354
245
223
205
155
150
136
136
126
Projected Corn Utilization
7,000
6,000
Million Bushels
5,000
4,000
3,000
2,000
1,000
0
96/97
Feed
98/99
00/01
Ethanol
02/03
04/05
Other
06/07
08/09
Exports
Acreage Used for Biofuel
30
Million Acres
25
20
15
10
5
0
2006/07
2007/08
Corn
Soybeans
2008/09
World Ethanol Imports, 2007
29%
37%
7%
3%
6%
18%
U.S.
EU
Canada
Japan
South Korea
Rest of World
Renewable Fuels Standard
40
30
25
20
15
10
5
Additional Advanced Biofuels
Cellulosic Biofuels
Source: Renewable Fuels Association
Biodiesel
Conventional Biofuels
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
0
2009
Billion Gallons
35
Oil Futures As Of 5/12/2008
126
$ per Barrel
124
122
120
118
116
114
June Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec.
2008 2008 2009 2010 2011 2012 2013 2014 2015 2016
5/1/2008
3/1/2008
1/1/2008
11/1/2007
9/1/2007
7/1/2007
5/1/2007
3/1/2007
1/1/2007
11/1/2006
9/1/2006
$ per Bushel
Nearby Corn Futures
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
2.50
2.00
Ethanol Gross Margin
Net Cost of Corn
Cost of Nat. Gas
3/21/2008
12/21/2007
9/21/2007
6/21/2007
3/21/2007
12/21/2006
9/21/2006
6/21/2006
3/21/2006
12/21/2005
9/21/2005
6/21/2005
3/21/2005
$ per Gallon
Historical Ethanol Margins
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Projected Ethanol Margins
3.00
2.50
$ per Gallon
2.00
1.50
1.00
0.50
0.00
Jun-08
Sep-08
Dec-08
Ethanol Gross Margin
Mar-09
Jun-09
Net Cost of Corn
Sep-09
Cost of Nat. Gas
Dec-09
ct
-0
8
D
ec
-0
8
Fe
b09
A
pr
-0
9
Ju
n09
A
ug
-0
9
O
ct
-0
9
D
ec
-0
9
O
08
ug
-
A
8
n0
Ju
$ per Gallon
Comparing Futures Prices
3.20
3.10
3.00
2.90
2.80
2.70
2.60
2.50
Ethanol
Gasoline