The coronavirus has been wreaking havoc on all markets and causing people to go into quarantine. That means no commute to work, which means there’s no need to fill gas tanks. This situation coupled with the battle between Saudi Arabia and Russia are putting a lot of pressure on corn markets and ethanol.
Jim Zook, executive director of the Michigan Corn Growers Association, is expecting the Michigan to take a hit in liquid fuel sales, which impacts ethanol production.
“Many of the plants are having to go back into the lean times of how to operate, and still to operate during these lean times as well,” he said. “This is going to have a huge impact for our growers.”
Zook believes the corn market will fall even lower before the market stabilizes and things return to normal.
“It is going to have a major impact on our farms—it’s going to have a major impact on available sales for many of our producers,” said Zook. “You can expect about a 25 percent hit in our ethanol demand here in Michigan.”
Since ethanol is already blended into the gasoline supply, Zook says gas sales will see the majority of that reduction.
“A friend of mine commented and said, ‘We have cheap gas but nowhere to go,’” said Zook. “Because of that, I’m hopeful that when we come back, we’ll come back a little quicker because people that won’t have as much money, they’ll still be able to buy gas because it is that much cheaper now compared to a few months ago.”
The next couple weeks might be rough with quarantines, but Zook is hopeful that the supply chains will remain operational because spring is just about here.
“Farmers are going to the field, and if they don’t go to the field, we don’t eat,” he said. “We have to ensure that that essential and critical need continues, and they’re able to get out and plant when they need to, that they’re able to get their fertilizers when they need to, that they’re able to get their chemistries when they need to. What better way to self-quarantine than to be in a tractor during this time?”