Ethanol industry moves into loss mode; Hurricane Ike, commodities surge are factors; DTN says 6-12 rough months ahead
Rising commodity prices and falling demand because of shuttered refineries during Hurricane Ike have pushed US ethanol into unprofitability.
According to the Department of Energy, refiners producing 88 million gallons of gasoline per day were operating at less than full capacity fuel to the after effects of the hurricane, while corn futures rose to $5.54 per bushel, up nearly forty cents for the week. The swing in corn prices have led investors to bail, on shares of pure-play ethanol producers such as VeraSun Energy (VSE) and Aventine Renewables (AVR).
DTN analyst Rick Kment told Reuters that margins would range from 25 cents positive to 25 cents negative over the next 6-12 months.
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