Posted by paul on January 23, 2009 at 17:55:17 from (66.44.132.127):
In Reply to: ethanol posted by ken in texas on January 23, 2009 at 14:58:04:
It makes good sense here in the upper midwest - Minnesota area. Our corn is typically 30-50 cents _less_ than the CBOT price. Some of you - like in Texas - might even have a positive basis, like 10-15 cents _more_ than cbot prices.
I agree ethanol plants in _those_ areas were put up with a lot of blue sky & little thought.
The Veradun deal with them going broke up here in Iowa, MN, etc was a management issue, they wanted to get fancy on the corn purchases and locked in corn long term at the highest price; now that corn is worth less than 1/2 of what they agreed to pay, of course the are going broke. That was a foolish move on their part, they shoulda been hedging off their purchases, and make money on the sales of ethanol and feed. Instead, they tried to speculate on the price of corn - and got stung.
Many other ethanol plants up here in the midwest are still doing just fine - they built wisely, located well, and run their business properly.
In those cases, ethanol works well as a small solution to the energy situation we face in this country. The bigger isssue tho is not energy - ethanol produces cleaner air, and better combustion, and better octain. This allows us to crack our crude oil in better ways to get more product out of a barrel.
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