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Report: Ethanol maker shuts down 2 Iowa plants

Trade wars drop biofuel prices to lowest in decade

A gas pump selling E15, a gasoline with 15 percent of ethanol, is seen in Mason City, Iowa, United States, May 18, 2015. REUTERS/Jim Young
A gas pump selling E15, a gasoline with 15 percent of ethanol, is seen in Mason City, Iowa, United States, May 18, 2015. REUTERS/Jim Young

Major U.S. ethanol producer Green Plains is shutting down two Iowa plants and cutting output at a Minnesota plant due to low profit margins amid a trade war, Reuters reported Monday, citing five industry sources it did not name.

The slash in production comes after the Trump administration’s escalating trade disputes cut off U.S. access to ethanol markets in China, contributing to a domestic supply glut that has pushed biofuel prices near their lowest levels in over a decade.

Green Plains idled until further notice its facility in Superior and soon will shut down the plant in Lakota — both in Northern Iowa — and cut its plant in Fairmont, Minn., to half capacity, the news service said.

But even more plants were being taken down, Reuters reported.

“They’re taking down some of their best-performing assets,” the news service reported one ethanol trader as saying in an interview.

Iowa’s Republican senators have been pressing President Donald Trump to approve year-round sales of E15, a higher blend of ethanol that’s banned for sale over the summer because of smog concerns. More sales, though, would increase the demand for corn and grow the domestic market for ethanol.

“Ending the federal government’s ban on the sale of higher blends of ethanol in summer months is the common-sense step President Trump could take to help ethanol producers who are dealing with historically low prices,” Sen. Chuck Grassley said in a statement Monday.

Last month at the Farm Progress Show in Boone, U.S. Agriculture Secretary Sonny Perdue said he had talked with Trump earlier that day and the president had instructed: “Let’s get it done.” Though Perdue acknowledged there were regulatory “hiccups,” he said an announcement on E15 could be “sooner rather than later.”

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Green Plains spokesman Jim Stark confirmed the Superior plant was temporarily shut down. “Lakota is running and so is Fairmont. We don’t comment on run rates at any particular plant,” he said.

According to its website, the Superior plant employs 43 and the Lakota plant employs 53.

Green Plains said in an Aug. 30 regulatory filing it was reassessing production levels based on market conditions.

Green Plains has annual ethanol production capacity of roughly 1.48 billion gallons, making it about tied with Valero Energy Corp as the No. 3 ethanol maker in the United States, behind POET LLC and Archer Daniels Midland Co.

The company said in a May filing it was considering selling some of its assets. Asked for comments about potential sales, Green Plains spokesman Stark said only that its “portfolio optimization plan” would be completed this year.

The U.S. Environmental Protection Agency under former administrator Scott Pruitt issued waivers to some oil refiners exempting them from requirements to blend ethanol into the gasoline supply. The waivers, coupled with trade tensions between the United States and China, have pressured prices downward for ethanol.

Last week, privately held Ergon Inc. said it would close its only ethanol plant, in Mississippi.

Reuters and Rod Boshart of The Gazette contributed to this report.

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