In China, artificially high corn prices are seriously weighing on margins for corn ethanol producers. Even though the government has tried to auction off corn stocks, there has been little demand, which should have the opposite effect on corn prices than what is being experienced. At the most recent auction, less than 2% of available stocks were sold because the government was demanding prices that were too high. Ethanol producers are restricted from importing cheaper corn while the domestic ethanol subsidy has fallen to just $16 per metric ton, further squeezing margins so that producers are operating at a loss.
