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Floods shut about 13 percent of U.S. ethanol production

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Floods shut about 13 percent of U.S. ethanol production

Floods shut about 13 percent of U.S. ethanol production

Massive flooding in the Midwest has knocked out roughly 13 percent of the nation's ethanol production capacity, as plants in Nebraska, Iowa and South Dakota have been forced to shut down or scale back production following the devastation.

Jillian Kitchener reports.

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Floods shut about 13 percent of U.S. ethanol production

Widespread flooding throughout the Midwest has ravaged American's farmland, and is now rippling through another industry - ethanol.

The U.S. has some 200 ethanol plants capable of producing over a million barrels per day.

But about 13% has been taken off line due to the floods, according to three traders who track operations.

Plants in Nebraska, Iowa and South Dakota have been forced to shut down or scale back production following the devastation.

In Nebraska alone, crop damage has exceeded $400 million according to state officials.

While production facilities owned by large companies were still operating despite the record floods, with rail lines that transport ethanol washed out and corn in storage ruined, production is dropping off, sending prices spiking in markets that buy that fuel.

The disruption comes as the ethanol industry is in the midst of historic downswing due to the ongoing trade conflict with China and sluggish domestic demand growth... leading to high inventories and weak margins.

The floods will boost margins for those still operating but could be punishing for firms who are digging out from the water.

And experts say -- it may be weeks before the full scope of the floods' impact is known.




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