Corn prices have hit their highest levels in almost eight years. Analysts say they are likely to get a further boost from motorists.
Drivers returning to the road are expected to lift demand for ethanol. About 40% of the U.S. corn crop goes to producing the gasoline additive, and consumption has plunged amid the pandemic. Now ethanol producers envision a rebound powered by economic reopenings and a potential wave of bioenergy-friendly regulations from the Biden administration.
Corn prices have already climbed about 50% over the past six months, lifted by increased demand from China. That country is buying more row crops in an attempt to bounce back from the African swine fever’s destruction of its hog herds and meet targets set in its recent trade agreement with the U.S. Chinese corn imports in the first two months of 2021 were more than five times higher than a year earlier, German bank Commerzbank AG said in a note last week.
On Feb. 9, corn topped $5.74 a bushel—its highest intraday level since July 2013. The most-active corn contract trading on the Chicago Board of Trade closed Tuesday at over $5.39 a bushel.
U.S. production of ethanol—found in roughly 98% of U.S. gasoline, according to the U.S. Energy Department—hasn’t returned to pre-pandemic levels. Domestic production stood at 922,000 barrels a day for the week ended March 19, the U.S. Energy Information Administration said Wednesday, down from more than a million barrels at this time in 2019.
