WASHINGTON, Jan. 31, 2013 – The U.S. Energy Information Administration (EIA) reported today that spot prices for U.S. fuel ethanol were lower throughout most of 2012 compared to 2011.
EIA data found that while prices were relatively stable during the first half of 2012, they increased at mid-year as severe drought and high temperatures decreased corn yields, resulting in higher prices for corn that is used to make nearly all U.S. ethanol.
Spot prices rose from a low of around $2 per gallon in mid-June to a 2012 peak of $2.61 in late July. However, that was still 30 cents per gallon lower than the peak spot price at about the same time in 2011. Ethanol prices last year did not rise above 2011 levels until December 2012.
Higher ethanol prices during the second half of 2012 were mainly the result of higher corn prices, EIA said, which rose 35 percent from mid-June through August because of concerns that the corn crop would be affected by the worst drought in the Midwest since the 1950s, coupled with triple-digit temperatures.
During the summer of 2012, the Agriculture Department reported that 88 percent of the U.S. corn crop was within a designated drought area. The 2012-13 U.S. corn crop is expected to be the smallest in six years at nearly 10.8 billion bushels, according to USDA's January 2013 crop forecast, which would be 13 percent smaller than the 2011-12 crop. USDA indicated that about 4.5 billion bushels, or 42 percent of the harvest, will go to make ethanol.
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