Those North Dakota farmers who have corn could cash in on a slight price bump selling their crop to western area ethanol plants to replace what’s been lost in drought-stricken fields.
In an effort to get the corn it needs, the company that operates Blue Flint Ethanol near Underwood is incentivizing growers with a 20 cent stronger basis at the plant than it is offering at its Dakota Spirit plant near Jamestown, which means more cash for hauling the longer distance.
"If a farmer can get a few more cents a bushel, they're going to find that market," said Dale Inry, executive director of the North Dakota Corn Growers Association.
Blue Flint used 25 million bushels of corn in 2016. Richardton-based Red Trail Energy, which sits in the heart of North Dakota’s drought, used 51 million bushels of corn last year. And statewide ethanol plants took in 177 million bushels. The industry uses roughly 40 percent to 60 percent of the corn grown in the state in any given year.
“We’re still up in the air on production in our area,” said Phil Coffin, chief marketing officer for Blue Flint’s parent company, Midwest AgEnergy Group, but they expect to have a better idea about a month from now.
North Dakota corn production is forecast at 417 million bushels, down 19 percent from 2016, according to U.S. Department of Agriculture National Agricultural Statistics Service estimates based on Aug. 1 conditions. Average yield is forecast at 121 bushels per acre, down 37 bushel from last year.
“The big question is going to be what kind of corn are we going to grow in North Dakota," Ihry said. “There’s still much to be determined right now.”
And late season rain could help.
“One thing we have going for us is we just came off a record crop year,” said Ihry, noting that farmers have held on to a lot of what they grew last season.
North Dakota corn stocks stored totaled 202 million bushels, up 67 percent from a year ago. Of that, 145 million bushels are estimated to have been kept at the farm.
Ihry said he hasn’t heard many concerned comments from western ethanol plants for this reason.
“They know what they need to do to get corn out here,” said Ihry, adding that, along with higher premiums, the plants could work out a deal with BNSF Railway to haul corn in.
Midwest AgEnergy produces about 65 million gallons at each of its two plants — Blue Flint and Dakota Spirit — amounting to about 130 million gallons of ethanol.
To make the fuel, in a typical year, Coffin said Blue Flint will typically pull in farmers from a 50- to 75-mile radius. Dakota Spirit, closer to the Red River Valley and the heart of North Dakota corn country, pulls in from 30 to 40 miles. But already this year, they’ve had trucks from as far as 100 miles to the east make the drive to Underwood.
Another factor to the west is feed for cattle. Ihry estimates if a western area producer has cows to feed, their corn is likely going to be made into silage.
“Feed is going to be dear in North Dakota,” said Coffin, adding Blue Flint hopes cow and calf ranchers will turn to their distillers grains as a hay supplement rather than keeping corn for silage.
More than 75 percent of the distillers grains produced in North Dakota leave the state. For this reason, Coffin said the competition with other sources of feed keeps the prices from skyrocketing.
“We’re price takers not price makers,” he said.
As far as condition of the crop, Coffin said east of Highway 281 and north of Interstate 94 is where the corn looks best. The middle third of the state is where fields begin to worsen.
“We’re on the western edge of that transition zone, but you don’t have to go too far east to find a good crop,” he said.