Corn is cut for feed west of Minot Sept. 26. Grain corn still remained to be harvested at the end of September, but lower yields are expected to limit supply for area ethanol processors. Jill Schramm/MDN

UNDERWOOD — Anticipating lower yields in its drought-impacted region, an area ethanol manufacturer is looking farther out for its corn supplies.

Blue Flint at Underwood is making adjustments, although it comes at a cost.

“We’ve pushed our bid up to levels this year that are probably 80 cents per bushel on corn stronger, cash basis, than a typical harvest year,” said Philip Coffin, vice president of commodities and marketing for Blue Flint. “We’re doing everything we can to get the message out to anybody who can see that we need corn here and are paying as much as we can.”

In eastern North Dakota, where most of the state’s corn is grown, the crop has been able to draw on subsoil moisture remaining from the previous year when it was so wet that many farmers didn’t get their corn planted, Coffin said. Yields there are projected to be close to average.

In the western two-thirds of the state, a second drought year is having a more drastic effect. Coffin estimated a third of the corn crop in the Underwood area already had been harvested for forage by mid-September. The remainder of the crop is uncertain as to how much grain is actually there, he said.

Coffin said Blue Flint has been contacting sources of supply that it hasn’t found necessary to use in the past.

“We’re talking with rail shippers in Minnesota, Wisconsin and Iowa and monitoring markets there to see if we can somehow bring corn in from a surplus state to help us out here,” he said.

Paying more to purchase and bring in corn from farther away raises costs, though, and higher costs can influence competitiveness in the ethanol and feed markets. Coffin said the United States is on track to grow the second largest corn crop ever, which means the nation’s other 169 ethanol plants may have better access and better corn prices and will be willing to sell ethanol much cheaper than Blue Flint can.

As a commodity, ethanol prices are set by the marketplace, not by suppliers who need to recover costs and try to make a profit.

“The dilemma that we’re faced with is we can and we certainly do have access to corn. The hard part is what price,” Coffin said. “Our ethanol competes with every other gallon of ethanol, and as long as there’s a big supply of corn in the country, there will be a big supply of ethanol for sale in the country.”

Once the corn harvest gets in full swing and eventually wraps up in North Dakota, Blue Flint expects to have a better idea of where it sits.

“We’re hoping that things fall in our favor, but hope is not a good strategy in our business. We’re planning to run our plant and are making arrangements for alternative supply and hope that we can find supply locally that works into our plan at better pricing,” Coffin said.