johnnymk
06-21-2008, 06:32 AM
http://uk.reuters.com/article/oilRpt/idUKN2032268120080620
NEW YORK, June 20 (Reuters) - U.S. ethanol distillers lost money on average during the week ending June 19 as flooding in the Midwest spiked prices for corn, the country's main feedstock for the alternative motor fuel.
Ethanol producers on average were losing a few cents for every gallon of ethanol they produced. "This has never happened before," Pavel Molchanov, an analyst at Raymond James and Associates in Houston, said about the negative profit margins that lasted through the week.
Prolonged near-record corn prices would likely keep some producers from operating at full capacity, he said.
Some 400 million gallons per year of total U.S. ethanol capacity of 9.2 billion gpy has been shut directly by the floods. But analysts have said shutdowns resulting from high corn prices could soon far surpass that number.
Newer, more efficient producers, especially ones that can sell dried distillers' grain, an animal feed byproduct of ethanol, were probably making a few cents profit per gallon.
But older, less efficient distillers, especially ones that are not located close to rail transit, were not doing as well.
July corn futures CN8 Chicago Board of Trade closed near $7.28 a bushel on Thursday. That was nearly $1.50 per bushel above prices from late last month.
Meanwhile, spot ethanol prices in the Midwest <ETHANOL/US> have risen about 40 cents since the floods to about $2.90 a gallon, on concerns that supplies will start to thin as plants reduce production.
Molchanov said rising ethanol prices could be a "silver lining" for the stronger ethanol producers, if prices rise enough to push margins back into the black.
The ethanol crush spread fell about 13 cents to 30 cents per gallon, according to Reuters calculations. After conversion costs for making the fuel, including natural gas costs, ethanol producers were losing a few cents per gallon. (Reporting by Timothy Gardner; Editing by Walter Bagley)
NEW YORK, June 20 (Reuters) - U.S. ethanol distillers lost money on average during the week ending June 19 as flooding in the Midwest spiked prices for corn, the country's main feedstock for the alternative motor fuel.
Ethanol producers on average were losing a few cents for every gallon of ethanol they produced. "This has never happened before," Pavel Molchanov, an analyst at Raymond James and Associates in Houston, said about the negative profit margins that lasted through the week.
Prolonged near-record corn prices would likely keep some producers from operating at full capacity, he said.
Some 400 million gallons per year of total U.S. ethanol capacity of 9.2 billion gpy has been shut directly by the floods. But analysts have said shutdowns resulting from high corn prices could soon far surpass that number.
Newer, more efficient producers, especially ones that can sell dried distillers' grain, an animal feed byproduct of ethanol, were probably making a few cents profit per gallon.
But older, less efficient distillers, especially ones that are not located close to rail transit, were not doing as well.
July corn futures CN8 Chicago Board of Trade closed near $7.28 a bushel on Thursday. That was nearly $1.50 per bushel above prices from late last month.
Meanwhile, spot ethanol prices in the Midwest <ETHANOL/US> have risen about 40 cents since the floods to about $2.90 a gallon, on concerns that supplies will start to thin as plants reduce production.
Molchanov said rising ethanol prices could be a "silver lining" for the stronger ethanol producers, if prices rise enough to push margins back into the black.
The ethanol crush spread fell about 13 cents to 30 cents per gallon, according to Reuters calculations. After conversion costs for making the fuel, including natural gas costs, ethanol producers were losing a few cents per gallon. (Reporting by Timothy Gardner; Editing by Walter Bagley)