New ethanol plant in Iowa begins crushing corn, weighs on DDGS: sources

04.07.2018

Elite Octane's new ethanol plant in Atlantic, Iowa, began crushing corn this week, multiple sources said Tuesday, adding DDGS sales from the plant have already weighed on the regional market.

Plants try to sell DDGS to nearby feedlots when possible, so the effects of additional supply can be very localized.

"Trucks are very sloppy right now. I was buying some low $90/st out of central Iowa this weeks," said a source. "Barns at plants are getting full coming into the holiday and there are a ton of cheap offers on this week/next week ship(ment)."

"It isn't helping the market at the moment," said another.

S&P Global Platts heard FOB Chicago DDGS unchanged at $156/st Tuesday. DDGS have fallen sharply since late May when they were $193/st on May 24.

"I've heard rumors of some tons trading as cheaply as $80-$90/st FOB plants in Iowa and Nebraska to move tons ahead of the July 4 holiday," a third source said. "Common offers are $100-$115/st FOB in Iowa, Nebraska and Minnesota."

The new plant's ethanol capacity is over 120 million gal/year, according to the Elite's website, which could translate to around 380,000 st of dried distillers grains with solubles (DDGS) per year.

Ethanol prices have not seen much reaction to the additional output as ethanol production rates have climbed in recent weeks, reaching 1.072 million b/d in the week ended June 22.

As the plant is operating for the first time, ethanol production is likely to run more slowly than normal and product might not be available as quickly as a fully-operational plant.

Ethanol production can take around three days from corn grinding to shipment at a plant running at normal efficiency.

The plant did not respond to multiple requests for comment Tuesday.


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