Today in Biofuels: USDA projects US corn acreage to decrease 8 percent in 2008; EU propsoes new sustainability directive; Range Fuels raises $130 million

Top Story:

The U.S. Department of Agriculture (USDA) released 2008 report on crop plantings, projecting that US corn acreage would drop 8 percent to 86.0 million acres. Soybean production is expected to rise 18 percent to 74.8 million acres. Wheat production will rise 6 percent to 63.6 million acres. “This news is inherently bullish for corn, as it indicates that last year’s record corn crop will almost certainly not be repeatable this year,” said Pavel Molchanov, analyst for Raymond James, in a note to shareholders.

Producer News:

In California, Pacific Ethanol reported record sales for the fourth quarter but a  $14.7-million loss. The company shored up its finances with a $40 million infusion from Lyles United, and said that it had addressed a material weakness in its financial controls.

In Colorado, Range Fuels closed a $130 million round of equity funding for expansion of its cellulosic ethanol production. The company uses a thermochemical process acting on wood waste. The funds will be used for construction of its proposed commercial-scale cellulosic ethanol plant in Georgia.

In New York, Albany Renewable Energy announced a $350 million ethanol plant, but said that after winning a bid competition conducted by the The Albany Port District Commission that it had not yet finalized financing.Project completion date was projected for early 2010, but plant capacity was not disclosed.

In South Dakota, VeraSun Energy Corp. completed its merger with US BioEnergy, creating the largest ethanol producer in the United States. The $707 million deal creates a 16 plant portfolio consisting of 11 operating plants and five under construction, representing nearly 1.5 billion gallons in capacity.

International News:

In China, Guangxi Zhuang Autonomous Region authorized the sale of an ethanol blend, becoming the 10th region in China to do so. Other provinces include Jilin, Liaoning, Heilongjiang, Henan, Hebei, Anhui, Shandong, Jiangsu and Hubei Province. Guangxi  produces 60 percent of China’s cassava, or more than 7.8 million tonnes per year.

In the Philippines, Chevron Philippines signed a memorandum of understanding Basic Energy for up to 19 Mgy of ethanol. Chevron would use the ethanol to meet the 5 percent ethanol blending mandate that will be in place in 2009, increasing to 10 percent in 2010.

In India, the Indian Oil Corporation said that it plans to become an ethanol producer, in response to the central government’s indication that it would increase the ethanol blending mandate from five percent to 10 percent effective in October. The company said that it would investigate all potential processes and feedstocks.

Research News:

The Energy Information Administration said that US ethanol production increased 4.3 percent in January to 664,000 gallons, up from 636,000 in December. The production figure represents a 36 percent increase in production compared to January 2007.

Policy and Policymakers:

The European Union has circulated a draft directive to address the use of sustainable biofuels when its 10 percent biofuels directive takes effect between 2011 and 2020. The proposed directive would require biofuels used in Europe to deliver a 35 percent life-cycle CO2 emissions gain over conventional fuels, increasing to as much as 60 percent  at a later date.

Consumer and Fleet News:

In South Carolina, the Greenville Transit Authority was renamed Greenlink and has converted its fleet to an undisclosed biodiesel blend.

Financial News:

The Biofuels Digest Indexâ„¢ (BDI), a basket of public biofuels stocks, fell to 114.20, down 1.81 from last Friday’s close.  Among diversified agribusiness, Archer Daniels Midland (ADM) fell 1.86 percent to close at $41.16.

Among ethanol stocks, strongly mixed results with Pacific Ethanol down 1.79 percent to $4.40 on a wider than expected fourth quarter loss, while VeraSun Energy (VSE) fell 6.73 percent to $7.35 as it completed its merger with US BioEnergy. Aventine Renewable Energy (AVR) was up 7 percent to $5.20.  Along small caps, Green Shift fell 23.80 percent to 0.10.  Overall, declines led advances 2 to 1.