Area for customer | login: password:

26.08.2008

US ethanol makers lose money after month of gains

NEW YORK, Aug 22 (Reuters) - U.S. ethanol makers lost money this week, after about a month of slim profits, as prices spiked for corn, the country's main feedstock for the alternative motor fuel, analysts said.

U.S. distillers were losing about 10 to 20 cents per gallon for the week ending Thursday, as corn prices rose during the week, analysts said.

U.S. ethanol capacity has shot up 50 percent since last August to more than 10 billion gallons per year, which could keep margins soft. [ID:nN08473750]

"It's not the greatest business right now," said Cory Garcia, a researcher at Raymond James and Associates in Houston, who added that upcoming crop data reports should keep prices volatile for weeks at least.

September corn futures on the Chicago Board of Trade closed at about $5.98 a bushel on Thursday, up about 47 cents from the previous week and up 76 cents from the week earlier. A broad rally in grains pushed corn prices higher, along with dry weather that clouded U.S. crop prospects.

Prices remained lower than record levels in June above $7 a bushel, brought about by the worst flooding in the Midwest in 15 years that made ethanol producers lose even more money during that time.

Ethanol prices rose slightly on stronger oil prices but were not enough to outweigh the corn gains. Spot ethanol prices in the Midwest rose about 22 cents since earlier in the month to about $2.34 a gallon.

Early in the month the U.S. Environmental Protection Agency kept renewable fuel mandates steady for 2008 at 9 billion gallons, rejecting a request by the Texas Gov. Rick Perry to halve the level, which gave some confidence to the industry.

Providing some relief to distillers, prices for natural gas, which fires most plants, have fallen on stronger U.S. supplies. Average cash natural gas prices in the Midwestern United States were $6.73 per million British thermal units, down more than 80 cents from earlier in the month.
(Reporting by Timothy Gardner; Editing by David Gregorio)

Reuters