Biofuels Stock and Financial Outlook for October 3: Stocks expected to open lower, ethanol near-term prices weak
Stocks were expected to open lower as investors awaited a report on service sector growth. Major stock indices were trading down 0.1% this morning in the stock futures market.
In biofuels, investors will consider the impact of a Citigroup report projecting near-term ethanol price weakness with improvements in the first quarter of 2008.
The Biofuels Digest Indexâ„¢, a basket of publicly traded biofuels stocks, slid 0.38% Tuesday as ethanol pure plays were hit hard by renewed selling pressure as investors surveyed a market replete with high corn prices and low ethanol prices at the pump.
VeraSun (VSE) was down 5.42% on news that the company halted construction on a new 110 Mgy ethanol plant in Indiana, and Big Ethanol companies such as Pacific Ethanol (PEIX) and Aventine (AVR) were down between 3 and 8 percent in today’s trading. Diversified companies such as The Andersons (ANDE) and Archer-Daniels-Midland (ADM) fared better, with ADM eking out a small gain for the day. Biodiesel stocks were also generally down although the demange was in the 1 to 5 percent range.
The CEO of Pacific Ethanol, said Neil Koehler, told the Associated Press today that “Margins are very slim right now, but we can handle it,” and AP reported that he blamed oil refiners for not buying more ethanol when the spread was more than $1 per gallon. Refiners blame low capacity but there are also rumors that oil producers are using their control of infrastructure to weaken their ethanol competitors.
The Dow was down 40.24 points to close at 14047.31, off 0.3% from yesterday’s all-time high. The S&P 500 was down 0.41 to close at 1546.63 but Nasdaq was up 6.12 points for the day, closing at 2747.11.
