Ethanol, corn prices to stabilize in 2009 after corn shock 2008, analyst projects

Raymond James analyst Pavel Molchanov, in a note to clients, has projected ethanol prices to average $2.42 and $2.48 per gallon in 2008 and 2009 respectively, while projecting corn costs at $5.48 and $5.45 per bushel. A “crush spread” of $0.46 per gallon in 2008 and $0.53 per gallon in 2008 is based upon a yield of 2.8 gallons per bushel. “Driven by constrained refining capacity and ethanol’s intrinsic advantages – as an octane enhancer, clean air additive, and valuable blend component – we project consistent growth in ethanol demand.  On the negative side, high corn prices continue to weigh on profitability,” he wrote.

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