Farmers are expected to harvest their second-largest corn crop, the news of which is pushing corn prices down. Since corn is the top raw material cost for distillers, lower corn prices increase ethanol margins. While the ethanol industry has seen shutdowns, bankruptcy filings and curtailments since late last year, larger ethanol margins would be welcome. U.S. ethanol production this year is also expected to be higher than last year due to biofuel blending mandates calling for annual increases in corn ethanol.
As of July 2009, the rack price of ethanol was $1.72 versus $1.99 for unleaded gasoline--a difference of 27 cents per gallon. The ethanol rack price decreased nine cents compared to last month's price but was $1.18 lower than a year ago. Unleaded gasoline's average rack price decreased four cents compared to last month's price but was $1.31 lower than a year ago.