IFB Ethanol Blog

WASDE: Ethanol Demand Down

The Agriculture Department's World Agricultural Supply and Demand Estimates (WASDE) released today places corn used for ethanol production at 3.7 billion bushels, down 300 million bushels from the November estimate.

"The most dramatic change in the December WASDE report was the big drop in corn used for ethanol production," said Terry Francl, senior crops economist with the American Farm Bureau Federation (AFBF). "I am surprised that corn use for ethanol dropped by that much. Demand for ethanol is down, just like demand for gasoline is down, but I just don't think the decline is that large. I believe 3.8 billion bushels to 3.9 billion bushels is closer to the mark."

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Verasun update

Bankrupt ethanol maker VeraSun Energy Corp said on Tuesday it would cancel nearly all its contracts to buy corn for its U.S. BioEnergy plants for deliveries through Jan. 15.

VeraSun lawyer Felicia Perlman told a bankruptcy hearing the company would also cancel contracts to buy corn for its Welcome, Delaware, plant through Jan. 31, but that contracts for its U.S. BioEnergy plant in Marion, South Dakota, were not included in the cancellation plans.

Canton Facility Leased

A grain storage facility near Canton is now being leased by an Ohio company.

The Andersons Inc. is leasing the facility from Green Lion Biofuels, a Canton company.

Green Lion acquired the facility from Central Illinois Energy, an ethanol plant local farmers helped finance. When the plant needed more construction money, Green Lion bought the facility for around $5 million and leased it back to the plant. The grain storage facility is on the same site as the ethanol plant.

The ethanol plant's board declared bankruptcy in December 2007 and local farmers lost their investments. The plant was bought by a consortium of banks that had invested in it and was renamed Riverland Biofuels.

The grain storage facility can hold 4 million bushels of corn, but The Andersons does not have a contract to provide corn to the adjacent ethanol plant.

(Source: Peoria Journal-Star)

Ethanol Plant Update

Illinois has 11 plants with a combined total of 1.4 billion to 1.5 billion gallons of ethanol, with five others under construction or expanding, according to Bloomington’s Illinois Corn Growers Association.

But while Illinois’ ethanol industry is growing, higher corn prices and tighter lending standards have made it impossible for some projects to get off the ground. Plants proposed in the Central Illinois communities of Chenoa, Streator, Gridley, San Jose and Hartsburg have suffered varying setbacks, some delayed, others scrapped all together. Of the half dozen plants proposed in the area, only one — in Gibson City — has moved forward with construction.

Being on the right side of a ticking time bomb may have been the key to whether plants survived being the drawing board.

(Source: Pantagraph)

Aventine Delays Nebraska Plant Opening

Aventine Renewable Energy Holdings will delay the opening of its new ethanol plant in Aurora, Neb., by roughly three months because of cost concerns.

The Pekin, Ill.-based company had planned to open the 113-million-gallon plant next March but now is shooting for June.

Poet Looking to Acquisitions

Poet, the largest U.S. ethanol company, is considering making acquisitions because the financial crunch has made it the best time "in at least five years" to do so, its chief executive said yesterday. Jeff Broin, leader of the private company based in Sioux Falls, South Dakota. He declined to say whether the company was looking to buy VeraSun Energy Corp., whose shares have been hit by costly contracts for corn.

(Source: Canadian Press)

Verasun on wrong side of corn market

The Des Moines Register reported today that Verasun Energy Corp., which has several ethanol production plants in Iowa, expects to post a loss of as much as $103 million for the third quarter after being caught on the wrong side of a swing in the corn futures markets last summer.

The company said that it got out of its futures positions in corn last summer when the price reached a record $7.99 per bushel. Instead, Verasun made physical purchases of corn that have turned out to be higher than today’s prices and have resulted in unprofitable input costs for the company.

State Grants $4M to Ethanol Plant

Abengoa Bioenergy's $275 million ethanol plant is under way, with a little help from the state of Illinois in the form of a $4 million grant.

Gov. Rod Blagojevich announced the grant from the state's Renewable Fuels Development program to assist with Abengoa's plant, already under construction in the Tri-City Port Authority district near Madison, Granite City and Venice. The plant will use approximately 32 million bushels of corn to create 88 million gallons of ethanol a year, and is estimated to create 60 permanent jobs and 250 construction jobs in the metro-east.

Christopher Standlee, Abengoa's vice president, said ethanol is a growth industry despite the rising price of grain.

"We have great belief in the long-term future of ethanol," Standlee said. He attributed the rising grain prices to rising gas prices, and said he was confident that improved ethanol technology will reverse that trend.

Javier Selgado, CEO of the Spain-based Abengoa, said the confluence of rivers, railways and highways made Madison the perfect spot for the company's first Illinois plant. It is also near the National Corn-to-Ethanol Research Center at Southern Illinois University Edwardsville, and is expected to use that facility's research to make its ethanol production more efficient.

(Source: Belleville News-Democrat)

Aventine Sees Weak Margins Ahead

Ethanol maker Aventine Renewable Energy Holdings Inc expects margins for the biofuel to be soft but not negative through the end of 2008, Chief Executive Ronald Miller said on Wednesday.

"In terms of margins, it's going to be lower than what we'd call a normalized margin, although we've not seen anything that would indicate a negative margin," Miller said in an interview.

Miller also said the difficult industry environment could prompt some players to seek partners in the coming year, similar to the way the oil industry saw a spate of mergers during the oil price drop in the late 1990s.

"I think there's going to be a good opportunity in the next 12 months for consolidation," he said.

In July, Pekin, Illinois-based Aventine posted a net loss for the second quarter because of a charge related to its liquidation of auction rate securities, but increased its production and its selling prices for ethanol.

Still, the company's $190 million expansion plan will eat up most of its $246 million in capital, even as the market remains barely profitable.

(Source: Reuters)

Aventine Expanding Capacity

Pekin, Ill.-based ethanol producer and marketer Aventine Renewable Energy Inc. has applied to the Illinois Environmental Protection Agency for a revised construction permit for a proposed expansion project at its operating Pekin ethanol plant. Aventine’s proposal, which is pending final approval by the IEPA, would increase the company’s capacity from 56.5 MMgy to 63.5 MMgy.

The company’s dry mill ethanol facility has a gas-fired boiler system that has already been operating for the past year and a half. The IEPA has given its preliminary approval and prepared a draft permit. The agency has determined overall emissions from the facility would increase beyond what is already permitted, IEPA spokeswoman Jill Watson said. “They aren't building anything new,” she said. “They just need the construction permit because they are increasing production.”

(Source:  Ethanol Producer magazine)