The Top 10 Biofuels Stories of 2008: #7, VeraSun’s bankruptcy, and the first generation ethanol collapse

The meltdown seemed to commence in the early summer when corn prices jumped from the $4 range to $7.

Biofuel Energy was the first to indicate that they had significant negative exposure on corn prices. In their case, they had failed to hedge their purchases and were buying in the sky-high open markets and selling ethanol at (presumably) a sharp loss.

Later in the year Aventine Renewable Energy announced that it had tens of millions of dollars impaired in suddenly illiquid short-term securities – a sure sign of impending financial collapse.

Finally, Aventine and VeraSun were caught out — not by the rise in corn prices — but by their swift fall after the September financial meltdown. They had locked in at way-above market prices, while ethanol prices were tumbling. Aventine flirted with extinction and saw its stock crushed by investors. VeraSun declared a nine-figure loss and bankruptcy.  Pacific Ethanol was hit by problems and declared a $69 million 3rd quarter loss, but POET seemed to roll along.

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