Ethanol Corn Shortage Subsiding

John Davis

The corn shortage earlier this year, brought on by the unprecedented increase in interest in ethanol, seems to be easing a bit.

This story from Forbes says an expected giant corn crop this year should make up for all the corn going into ethanol production:

Ethanol producers have been squeezed by rising costs lately. Corn prices skyrocketed as demand from ethanol and food producers outstripped supply. But prices now look likely to abate because of ramped-up production. The Department of Agriculture reported last month that farmers planted 19% more corn than they did a year ago.

(Citi Investment Research analyst David) Driscoll said falling corn prices should boost margins at a time when the sector also enjoys strong political support. “Bipartisan political support for ethanol continues with all signs pointing to increased mandates for ethanol,” he said.

The news is so good Driscoll has been telling clients to buy some ethanol producers’ stocks… including VeraSun Energy and BioFuel Energy.
Shares of VeraSun Energy, which is headquartered in Brookings, S.D., gained 3.3%, or 46 cents, to $14.54. Shares of BioFuel, which is headquartered in Denver, Colo., gained 1.1%, or 10 cents to $9.19. Both are pure-play ethanol producers.

Ethanol, News