The cash market for ethanol has been extremely volatile over the last few years. Ethanol producers have struggled to meet demand during certain times of the year, which has led to a shortage of supply and high prices. Fortunately, due to the excess demand for ethanol and its blending incentives, we are now seeing many new producers come online. Due to this recent volatility and increase in production capacity, many ethanol producers have opted out of standard futures contracts. Instead, they’ve adopted cash bidding systems that allow them to sell their product directly from the producer at a fixed price per gallon. If you’re an ethanol producer thinking about adopting cash bidding as an alternative to standard futures contracts, keep reading. This article will explain what you need to know about Cardinal Ethanol Cash Bids – both the good and the bad.

What is a Cardinal Ethanol Cash Bid?

A Cardinal Ethanol Cash Bid is a price that a Cardinal Ethanol producer will pay to purchase ethanol from another ethanol producer. The amount paid will be dependent on the ethanol’s feedstock cost, location, and delivery date. Ethanol producers use a cash bidding system as an alternative to standard futures contracts. Instead of selling their product at a fixed price per gallon that can fluctuate with the market, they can sell their product at a fixed price per gallon that is guaranteed by Cardinal Ethanol’s cash bid system. Some producers have opted out of standard futures contracts due to the volatility of the ethanol market. The current demand for ethanol has been so high that many producers have struggled to meet demand. This has led to a shortage of supply and higher prices.

The Good

The Cardinal Ethanol cash bidding system will give you the ability to sell your ethanol at a price that is guaranteed by the company. This will provide you with some peace of mind knowing that you will receive the predetermined price for your ethanol, even if the price of ethanol rises. It will also allow you to sell your ethanol quickly, with minimal paperwork, on a non-just-in-time basis. Additionally, the Cardinal Ethanol cash bidding system will help you avoid the price fluctuations that can occur with standard futures contracts. It will also allow you to sell your product to the highest bidder, which is especially beneficial if you have multiple offers on the table.

The Bad

Unfortunately, the Cardinal Ethanol cash bidding system is not perfect. If you sell your ethanol with their cash bidding system, you will not be eligible to receive the ethanol blending credit. The ethanol blending credit is a tax credit that allows producers to reduce the amount they owe in taxes. As a result, selling your ethanol with the Cardinal Ethanol cash bidding system will reduce your profit margins. Another drawback of the Cardinal Ethanol cash bidding system is that it is not available everywhere. In fact, it is only offered in the following states: Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, Ohio, and Wisconsin. If you operate your ethanol business in one of these states, you can take advantage of this unique cash bidding system.

Final Thoughts

If you are an ethanol producer and are having trouble finding buyers for your product, consider implementing a cash bidding system. It will allow you to sell your product at a price that is guaranteed by the company, which is especially helpful during times of high volatility. However, keep in mind that if you sell your ethanol with a cash bidding system, you will not be eligible to receive the ethanol blending credit.