Company officials said REX also saw solid earnings growth in the fourth-quarter for which results are scheduled to be released Tuesday.
“We have some significant benefits going our way,” said Stuart Rose, former CEO and executive chairman of the board, during a conference call with investors. “First, of course, is lower corn pricing, which followed an excellent corn harvest this year (2016). We have continued low natural gas rates, and increased exports.”
Natural gas is used to produce corn ethanol, which accounts for the vast majority of U.S. ethanol exports.
Rex, which has interests in six ethanol-production facilities, shipped more than 661 million gallons of ethanol over the 12-month period ended Oct. 31 last year and continues to benefit from growing worldwide demand, which calls for U.S. ethanol producers to collectively ship at least 1.1 billion gallons this year.
Last year, 78 countries imported 1.05 billion gallons of U.S. ethanol, setting a new record, according to the Renewable Fuels Association (RFA). Consumption was led by Brazil, which accounted for 26 percent of U.S. ethanol exports, Canada (25 percent), and China (17 percent), according to the RFA.
China worries send stocks reeling
Still, Rex — which previously operated as an electronics and appliance retailer, Rex Stores Corp. — and its competitors face several headwinds in the ethanol industry going forward.
Exports could be curtailed by low oil prices, which make ethanol less competitive on the world market, and uncertainty in China, which last month increased tariffs on imports of U.S. ethanol, leading to the cancellation of several shipments.
In a joint letter to President Trump, the RFA, Growth Energy and the U.S. Grains Council asked for the administration’s “assistance in urgently addressing China’s recent implementation of protectionist trade barriers that are shutting out U.S. exports of ethanol.”