Posted on 06/15/2008 5:45:54 PM PDT by Fred
Large numbers of small to mid-size ethanol producers could shut down over the coming months after flooding across the US midwest caused irreparable damage to the year’s corn crop and pushed corn prices up sharply, says a report by Citigroup.
At least five small to mid-size ethanol plants had shut down in recent days, said David Driscoll, Citigroup’s US food manufacturing analyst, in an equity research report.
The widespread flooding, on a scale the region has seen only twice in the last 25 years, had forced down ethanol margins over the past 10 days, leaving small and mid-sized ethanol producers running at substantial losses against cash costs, Mr Driscoll said.
“As a result of the rapid margin deterioration, we believe that many, if not all, of the small to mid-size producers will be forced to shut down over the next few months.” This could result in as much as 2bn-5bn gallons of ethanol going off-line in the next few months, he said.
Mr Driscoll said corn – now selling at more than $7 a bushel, compared with about $4 a year ago – meant extreme tightness in the corn market, suggesting the increased potential for political intervention in ethanol markets.
The intervention would be aimed at cutting ethanol output and bringing corn to the food market. Corn prices have risen by $1 in the last 10 days.
“Just the spectre of political intervention will likely cause the market to question the magnitude of future biofuel growth, adding further pressure on valuations across the ethanol industry,“ Mr Driscoll said.
This has led Citigroup to reduce its earnings-per-share estimates for ethanol companies and drop ratings to “sell” on those that are strictly into ethanol production, including VeraSun Energy and BioFuel Energy.
Hand of God???
Feeding people first could be the message...
Perhaps we should ask the Saudi’s to make up any shortfall with a tad of increased oil output.
....another good reason to step away from ethanol!
Good.
Or perhaps we could drill our own dang oil. We forget that we get most of oil from Canada and Mexico. The Saudi’s putting out more oil will bring the world price down but won’t make more immediately available to us.
Hope they rescind the up-to-10% ethanol mandate in my state.
“Hand of God???”
HIS HAND is everywhere.
HE takes care of HIS own,don’t worry..
God gave us this land.
HE waited until a group of like-munded men were gathered in the same window of opportunity to do something besides just vote.
I believe HE still cares for our nation ... and HE continues to write on the wall ... We Have Been Found Wanting.
Growing fuel sounds and looks so good on paper .................
As long as what we want to grow for fuel ..... actually grows.
I know of no insurance company that insures against "Acts Of God"
The longer we wait .... or are put off .... the longer and harder it will be to recover.
Drill...you ba******. SENSIBLE solutions will come.
Aw, too bad. I was geared up to purchase a vehicle that would get 25% less fuel economy than what I drive now.
Back in 2006, Canada agreed to a request by the U.S. to quintuple oil sands production — to enable exports of 5 MM bbl/d to the U.S. by 2015. We're on track to do that — unless U.S. based “environmental” organizations succeed in shutting down the projects.
If the U.S. doesn't have the political will to stand up to the “environmental” lobby & produce more oil from home — don't expect other countries to have a lot of sympathy. We all have our own “ANWRs”.
Suit yourselves — drill or don't drill — but, please stop whinging when other countries also exercise their sovereign rights to not pump more oil.
Notworried at all, just enjoy HIS Intrigue and style...
Don’t bet on it. Granholm is on the way from Michigan to jack it up to 50%.
Drill ye tarriers, drill.
Its time to stick it to “Big Corn.”
What I figured.
Of course, with 99% of vehicles on the road stalled dead trying to run 50% ethanol he isn't going to sell very much.
I did the standard fuel test a couple of weeks ago where you put gasoline in a test tube with a little water, measure levels and then come back a few hours later and measure again. Amazing how much water ethanol can absorb even at 2% of the total by volume. The bad thing is that the water condenses back out some time later in storage leading to all kinds of problems. This is called phase separation and there is no practical way to avoid it.
Once the powers-that-be acheive their dream of a north american union, then we will finally be energy independent/s
Stop the insanity which is corn-based ethanol.
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