Official predicts fall for ethanol prices

WASHINGTON (AP) -- Making ethanol from sugar could be profitable with the current high demand for the gasoline substitute, but it probably won't be for long, the Agriculture Department said Monday.
At current market prices for ethanol, converting sugarcane, sugar beets, raw sugar and refined sugar to ethanol would be profitable, the department said in a report. However, the report added that those market prices are expected to drop as more ethanol is produced, mostly from corn.
"At this high, unusual price, I can conclude that it's economically feasible to produce ethanol from sugarcane and sugar beets," the USDA's chief economist, Keith Collins, said at a news briefing. "However, I would not want to pour concrete based on $3-a-gallon ethanol prices" because the futures market predicts ethanol will drop to $2.50 by next year, he said.
At that price, sugar to ethanol would not be economically feasible, Collins said.
The report concluded that sugarcane and sugar beets were nearly 2 1/2 times as expensive to turn into ethanol as corn.
"Corn certainly has the competitive advantage in the current market environment," Collins said.
The report did find that molasses, a byproduct of sugarcane and sugar beets, could be produced at a price in the neighborhood of corn. But Collins said there isn't much molasses made in the United States, negating it as a significant source of ethanol.