Slumping demand for ethanol, high prices for corn and wholesale gasoline, record levels of ethanol supplies, and weakening exports to Brazil have combined to dent profit margins for ethanol producers. "It's safe to say that majority of producers are in the red," said Rick Brehm, president of Lincolnway Energy. "The negative margins along with the fact that ethanol supplies are [at] record levels with exports beginning to fall away, is not a good situation going into the spring," said commodity broker Tomm Pfitzenmaier.

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