Nebraska farmers are expected to harvest their largest corn crop on record, 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 August 2009, the rack price of ethanol was $1.72 versus $2.00 for unleaded gasoline--a difference of 28 cents per gallon. The ethanol rack price didn't change from last month's price but was $1.03 lower than a year ago. Unleaded gasoline's average rack price increased one cent compared to last month's price but was $1.10 lower than a year ago.