So what happens if the USDA’s demand assumptions are off the mark?

“There’s a tendency to look at these numbers and say that demand is a given,” said Basting. “As we move forward, one of the sectors we must monitor closely is the feed sector. The profitability is coming back slowly for some of these sectors — and I underscore slowly.”

There isn’t a push right now towards expansion, noted Basting. “There’s a push towards stabilization in some of the sectors. The hog and poultry sectors are examples. But those sectors would be vulnerable from a demand and usage standpoint if the market was to continue to rally. Looking ahead, that would be the first sector I’d look at as the most elastic or responsive to changes in price.

What might be the impact of the EPA’s impending decision on E-12/E-15 blends?

“That’s a tricky question,” said Roggensack. “When you throw in politics it makes things pretty difficult. But we’re in a world where what comes out of Washington, D.C., is more uncertain than normal.”

Roggensack wouldn’t be surprised to see EPA allow the ethanol mix “to shoot up to 15 percent. In return, they might drop the subsidy for ethanol producers. That could cause a much more volatile swing in the production of ethanol.

“Iowa State University studies show if you drop the subsidy it might cause an initial negative reaction. But in the long-term it wouldn’t have a whole lot of impact on ethanol consumption over the next couple of years.”