Corn Crop Numbers Boost Ethanol Producers
by The Investment U Research Team
The reports coming out from the U.S. Department of Agriculture suggest that this year’s corn crop could be a record breaker. If conditions hold, 2009 could be one of the best corn crops of the past thirty years.
And that’s a good thing for ethanol producers.
A majority of the ethanol industry is still in shambles from the collapse of oil prices. Companies have been crippled by a laundry list of issues – many self-inflicted: misjudged corn hedging, over expansion, and dependence upon government regulation.
However, at the end of the day, cheap corn spells increased profits for ethanol producers. A big crop mean low corn prices, and you can already see the impact on some of the more well-known ethanol companies.
Green Plains Renewable Energy (Nasdaq: GPRE), Pacific Ethanol (Nasdaq: PEIX), BioFuel Energy Corp (Nasdaq: BIOF) and New Generation Biofuels Holdings (Nasdaq: NGBF) have all seen increased volume and some price activity.
Even defunct Verasun (OTC: VSUNQ) and Aventine Renewable Energy Holdings (OTC: AVRNQ) have seen recent interest – and they’re bankrupt.
But on further investigation even those companies not in bankruptcy don’t look incredibly strong. It reminds us that while ethanol may become a integral aspect of our future energy picture, many of these companies have yet to prove that they can consistently perform.
It’s why the sector will continue to be filled with great promise and even greater risk that approaches highly speculative.
Symbols mentioned in this article: GPRE, PEIX, BIOF, NGBF, VSUNQ and AVRNQ.
Any investment contains risk. Please see our disclaimer.
One Response to “Corn Crop Numbers Boost Ethanol Producers”
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Point of clarity. PEIX’s ethanol is on chapter 11 and NGBF is not corn based ethanol.
Sacramento, CA, May 18, 2009 – Pacific Ethanol, Inc. (the “Company”) (NASDAQ GM: PEIX), announced today that its subsidiaries which own its four wholly-owned ethanol production facilities (“Plant Subsidiaries”) have filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware in an effort to restructure their indebtedness.
New Generation Biofuels, Inc., manufactures an alternative bio-fuel from vegetable oils and animal fats in North America, Central America, and the Caribbean. It offers its bio-fuel or fuel additive for use in diesel fuel applications, including power generation, commercial and industrial heating, and marine transportation.
Thank you,
Jim
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