NEW YORK/CHICAGO - Biofuels pioneer Archer Daniels Midland took another step toward abandoning its pure-play ethanol assets on Friday, the latest sign of the industry’s struggles with U.S. President Donald Trump’s trade wars, thin margins, and overproduction.
They had banked on China to buy excess capacity, but punitive tariffs in the last two years have halted buying, exacerbating the industry’s substantial overcapacity. ADM executives acknowledged that problem on Friday when the company reported that profit tumbled 41 percent in the first quarter. “Our decision to monetize the dry mills is frankly a strategic decision on our part to basically help the industry consolidate,” Young said.
“We don’t have a demand problem as much as we have a supply problem. There are just too many inefficient plants out there, and they need to go before we see a rebound,” said one ethanol trader on Friday. “It’s not like we are producing DVDs or CDs that no one wants.”
Get rid of ethanol.
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