Creede, I'm currently digging out from the snow in western NY. <g>
I find article below this to be a good gage. The price of corn is much higher now. Ethanol is a commodity like corn. Corn is traded as a commodity, in bushels. Ethanol as a commodity is traded in gallons. From ethanol facts. In general, one bushel of corn can produce at least 2.7 gallons of ethanol. Pounds of corn to a bushel, from some who knows.
siliconinvestor.com
Hope this information helps. Many of the larger ethanol producers hedge their positions. As to the current extent. I do not know. What I do know. Oil and ethanol will change in price and so will the companies that sell them. I hope to take advantage of timed buys and sells.
I'm generally a value buyer. I own some AVR currently based on their market cap, financial strength, value, and size. I am currently waiting to buy some out of the money calls in AVR. I already own the stock and have written the calls against that position.
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At worst, agricultural analysts said, some ethanol plants are operating in the red, but some analysts said margins for ethanol producers overall are anywhere from 60-70 cents a bushel to upward of $1.40 on each bushel of corn.
The higher levels depend on whether the plants are vertically integrated - having their own supply of corn - and have paid off their construction costs. When corn prices were around $2.50 a bushel and ethanol prices were at $2.40 a gallon last summer, the initial rate of return was closer to 34%, said Mark Flannery, research analyst with Credit Suisse.
If corn prices do stay strong and energy prices stay relatively weak, it will help to slow construction or limit the growth of the ethanol industry, and that’s “the number real goal of the market,“ said Don Roose, president of U.S. Commodities. “The expansion in biofuels has come too fast too far to stay at this pace.“
cattlenetwork.com
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