What Is the Corn-Ethanol Crush Margin?
The crush margin is the profit (or loss) an ethanol plant earns per bushel of corn processed. It accounts for the revenue from selling ethanol and distillers grain, minus the cost of corn and natural gas (the primary processing energy input).
The Crush Margin Formula
| Component | Factor | Explanation |
|---|---|---|
| Ethanol Revenue | ethanol price × 2.8 gal/bu | Average yield: 2.8 gallons of ethanol per bushel of corn |
| Distillers Grain Revenue | ~$0.15–$0.25/bu | Wet or dry distillers grain sold as livestock feed co-product |
| Corn Cost | local corn cash price $/bu | Iowa average cash corn from USDA AMS MARS API |
| Natural Gas Cost | Henry Hub × 0.036 MMBtu/gal × 2.8 | ~0.1 MMBtu of natural gas per bushel of corn processed |
| Net Crush Margin | Revenue − Corn − NatGas | Positive = profitable. Negative = plants under pressure. |
Why the Crush Margin Matters for Corn Prices
Wide positive crush margins mean ethanol plants are generating strong profits and have incentive to maximize corn purchases. Plants operate at full capacity and actively bid for nearby corn, supporting or strengthening local elevator bids.
Normal operating margins. Plants are running but not in aggressive corn procurement mode. Local corn bids will track CBOT futures without unusual basis strength or weakness from ethanol demand.
Negative crush margins mean ethanol production is unprofitable. Plants begin throttling production and reducing corn purchases, which removes a major source of local demand and typically weakens elevator bids by $0.05–$0.25/bu over 2–4 weeks.
Ethanol's Scale in Corn Markets
The U.S. ethanol industry processes approximately 5.5 billion bushels of corn per year — 38% of total U.S. corn usage. This makes the ethanol sector the second-largest consumer of U.S. corn (behind livestock feed). A 10% reduction in ethanol plant utilization would remove approximately 550 million bushels of annual corn demand — equivalent to 9% of the total corn supply.
Iowa, Nebraska, Illinois, and Indiana account for more than 60% of U.S. ethanol production capacity. Corn prices in these states are particularly sensitive to crush margin changes because the local ethanol plant is often the nearest elevator bid competitor.
Data Sources
GrainBrief calculates the crush margin daily using free government data sources. Ethanol spot price from EIA's weekly petroleum survey. Natural gas cost from the Federal Reserve's FRED database (Henry Hub spot). Iowa corn cash price from USDA AMS MyMarketNews daily elevator reports. No paid data subscription required.
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