Alarming Bell for Ethanol Market as US Corn Belt Shows Menaces
- 20-Jun-2022 6:05 PM
- Journalist: Harold Finch
Texas, USA- According to the U.S. climate prediction centre, upcoming corn production in the U.S. market may reach the bottleneck with the rising temperatures. As per the weather reports, the initial days of June stayed warmer as required for corn cultivation, but the temperature uncertainty in the forthcoming month has raised the concern among the significant Ethanol producers worldwide. As a ripple effect, the market prices of Ethanol in the global market will soar, impacted by the shivering corn prices.
The corn prices in the global market have already been burning amid the Russia Ukraine war, and the temperature variations have fuelled the fire. As per the U.S. Energy Information Administration data, the feedstock for Ethanol is Corn, shrunk in the North American market by approximately 2% despite the stable production in the regional market. The key reason behind the upcoming hike in the prices of Ethanol are the diminishing feed production. June month generally favours the production of Corn, but the predicted unfavourable weather conditions may create a hurdle for the supply availability with the significant regional manufacturers. Consequently, the market dynamics of Ethanol will observe bullish behaviour in the North American market.
European countries such as France and Germany have increased the demand for Ethanol from major supplying countries to the rising need for biofuel in their domestic market. The government officials of France wanted to fulfil the E85 policy; as a result, the demand for Ethanol skyrocketed amid escalating fuel prices. This demand and increased feedstock prices will lead to the increased production cost of Ethanol in the European market.
As per ChemAnalyst, the market sentiments of Ethanol will continue to rise in the global market on the back of tight feedstock corn supply from major producing countries. Furthermore, the rising demand for biofuel in the respective regional markets became the driving force for the rising prices of Ethanol.