The drought and the price of ethanol - KSFY News - Sioux Falls, SD News, Weather, Sports

The drought and the price of ethanol

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In the last month in southeast South Dakota less than one inch of rain has fallen. Usually we see three inches. Experts say that lack of moisture could cost you more when filling up with ethanol at the gas pump.

Just like many farmers in southeast South Dakota, Paul Shubeck's corn is brown and dry because of the lack of rain.

"In 30 years of farming I've never seen it this dry," Shubeck said.

And that's a big problem. The corn isn't growing.

On a good year, Paul will get about 150 bushels an acre from his corn fields but in a drought situation like this he only expects to get five bushels an acre which he's calling a disaster.

"It's not going to be a normal year and of course our income will be less," Shubeck said.

And that's not just the case with farmers but with some ethanol plants.

We talked to Tom Buis, Growth Energy's CEO on the phone.

"In the ethanol industry, we've already seen production cut by 15% in the last five weeks," Buis said.

And that's because the price of corn is too high. Buis says the drought is causing some other short term problems too.

"We're seeing prices, commodities get up to record levels and that will occur until the market sorts out best and highest use for whatever commodities is short," Buis said.

What you pay to fill up at the pump with ethanol has been steady.

"Ethanol is trading 35 cents a gallon less than gasoline. It's still saving consumers at the pump," Buis said.

"Will prices go up? Maybe a little but they will be going down by January," Shubeck said.

We should learn more about how severe this drought is with the U.S. Department of Agriculture releasing a crop report Friday. But for Shubeck, he says it still won't help.

"It's all a guess and it will be until we get a harvest," Shubeck said.

That report is expected to show corn and soybean production cut by 20% or more. Experts say they won't have a solid number until farmers start to harvest.

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