Midwest Economic Growth Stalled, More Ethanol to go to Brazil

Sep 3, 2019

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 Slow or no economic growth is expected over the next several months in nine Midwest and Plains states, according to a  new report from business supply managers. 

The report issued today says the Mid-America Business Conditions Index dropped below growth neutral in August, hitting 49.3 compared with 52.0 in July. The index had remained above growth neutral for 32 straight months.

Creighton University economist Ernie Goss blamed the slowdown on weak farm and manufacturing sectors, produced in part by tariffs and a global economic slowdown.

 

While some ethanol plants in Iowa are shutting down, Brazil says it will allow more US-produced ethanol into the country.  That move could ease fears of some corn growers and ethanol producers.  Both have been concerned since the Environmental Protection Agency recently granted more than thirty Renewable Fuel Standard waivers to the oil industry, effectively reducing the amount of ethanol mandated by law.  

David Ripplinger is a North Dakota State Agricultural Economist. Ripplinger says Brazil’s decision on ethanol is a bright in a somewhat gloomy economic outlook.

In terms of the small refinery waivers, and everything else and the trade war, it’s really a mess.  So this is a really tiny piece of good news but honestly, any piece of good news will help.

Brazil is raising the tariff rate quota for ethanol imports, from about 159 million to about 198 million gallons for the next year.