« US Money For NZ Ethanol Company | Home | Corn Ethanol: Laundering Fossil Fuels, Bilking Taxpayers, Damaging The Environment »
Ethanol Makers
By Mr Ethanol | April 26, 2007
Forbes:
As ethanol companies report results for the first-quarter, the cost of the corn is likely to be an irritating thorn-in-the-side for some.
The market price of corn surged in the first quarter, peaking at $4.49 a bushel on Feb. 26 on the Chicago Board of Trade. A bushel of corn has historically traded closer to about $2 a bushel, but growing demand for ethanol and investor interest in corn futures pushed prices to record highs.
That may cause trouble for ethanol producers, which in the U.S. make the alternative fuel largely from corn.
Higher corn costs pressure profit margins on one end, while lower selling prices for ethanol squeeze margins on the other. How ethanol producers fared in the first three months of the year will have much to do with how they were able to protect themselves against rising corn costs.
Producers tend to keep their hedging programs under wraps for competitive reasons, which can make forecasting earnings performance tricky.
“The degree with which the ethanol companies are going to have strong margins will depend to what extent they successfully hedged corn,” said Paul J. Resnik, an analyst with Dutton Associates, adding that ethanol at $2 or more a gallon and corn around $3.50 a bushel “is a good business.”
Ethanol prices tumbled 23 percent in the first quarter, to $1.92 per gallon. Ethanol fetched about $2.49 at the end of 2006.
Related Posts
- Brazil’s Sugar/Ethanol Makers May Begin To Reduce New Mill Investing
- Biofuels Bonanza Facing ‘Crash’
- Cars And Trucks And SUVs, Oh My
- Green Fuel Makers Team Up On Cellulose
- Brothers Of Invention Make A ‘Cellulosic’ Ethanol Find
- Food Groups Urge Bush To Suspend Sugar-Ethanol Tariff
- Ethanol: Too Much, Too Soon?
- Ethanol Makers Pursuing Avenue ‘Q’
- Group Says Ethanol Holding Down Price Of Gas
- BullMarket.com Offers Investment Opinions on Seed Companies
New Way Of Making Easy Money Online