ADM Plant Closing Unlikely to Reshape the Ethanol Market
ADM Plant Closing Unlikely to Reshape the Ethanol Market
ADM announced Monday that it will close the 30 million gallon ethanol plant in Walhalla, N.D. later this spring. This news comes as ADM as a company has developed a plan to streamline its operations and focus on efficiencies and profitability of each of its facilities.
The plant in itself sits just miles away from the Canadian border. This leaves the question of how other small plants can manage to remain profitable and return strong returns to the company.
Given that overall transportation costs for the plant are likely higher than most other plants, and that a 30 million plant in today’s scope remains small, it appears that this may just the tip of the iceberg of plants on the fringe of corn production and ethanol shipping routes that could find themselves under pressure during upcoming months or years. With the large amount of ethanol production capacity in the ADM stable, it appears that this plant is the low hanging branch that is going to be trimmed.
However, there are likely many other plants out there that are not in the ADM fold that will continue to do business; many of these are likely to be better positioned based on location to market for corn and ethanol.
The closure of this plant is not likely to have significant effects on the overall corn market or the ethanol price; the bigger effects will be on local cash corn prices, as well as overall economic hurt to the community.
