As Many As 50 Ethanol Plants Shelved In Recent Months - Cargill Yanks $200M Facility Near Topeka

[hatrack]

NEW YORK (Fortune) -- Cargill announces it's scrapping plans for a $200 million ethanol plant near Topeka, Kan. A judge approves the bankruptcy sale of an unfinished ethanol plant in Canton, Ill.. And that was just Tuesday.

Indeed, plans for as many as 50 new ethanol plants have been shelved in recent months, as Wall Street pulls back from the sector, says Paul Ho, a Credit Suisse investment banker specializing in alternative energy. Financing for new ethanol plants, Ho says, "has been shut down."

How can the ethanol industry be slumping only two months after Congress passed an energy bill most experts consider a biofuels boon? The answer is runaway corn prices.

Spurred by an ethanol plant construction binge, corn prices have gone stratospheric, soaring from below $2 a bushel in 2006 to over $5.25 a bushel today. As a result, it's become difficult for ethanol plants to make a healthy profit, even with oil at $100 a barrel.

EDIT

http://money.cnn.com/2008/02/27/magazines/fortune/ethanol.fortune/index.htm

[phantom power]

1. Wow. Talk about receding horizons.

[villager]

2. algae is the key -- but I guess there isn't enough corporate profit in it?

n/t

[Vincardog]

3. The key is the " healthy profit" why does everyone demand exorbitant profits?

Every where you look from Solar to wind and wave energy everyone wants to make the same exorbitant profit that the OIL companies make. Is there no reward in making a modest profit while helping the world?

[Zachstar]

4. Fuel from corn harms the world.

Until they can get fuel from quick growing grasses and wood chips and sawdust then it is a harmful industry that I am glad to see fail.

Guess who paid the price for such a fake upswell in corn prices?

[Vincardog]

5. You are correct. NAFTA flooded Mexico with cheap corn and drove the farmers off the land

then the Corn to gasohol BULL comes around and drives the price of food through the roof.
Who pays? Only the poor and working people as always.

[pscot]

6. Bubble, bubble, bubble,bubble, bubble, bubble

POP!

[hunter]

7. JohnWxy, you need to update your journal...

:yoiks:

[Nihil]

8. Hurray!

Actually the smart thing for the owners to do would be to close
most of the ethanol plants but keep a few open to produce cheap
vodka ... the population will need it pretty soon and they won't
be able to afford the proper imported stuff so a good, cheap
US-grown brand will make a killing ...

:+

[CRH]

9. Jeez after all the greased palms in corn belt corporate politics, who would have thought.

The fact that it was a non viable net energy losing system, lends unfavorable testimony that realistic solutions to the energy crisis will be found from within the body politic.

Not to fear for corporate profits though, now that food is breaking through cost barriers, corn has a more negotiable value at home and abroad. Mexico needs imported corn for their tortillas and chips too, since US subsidies and massive dumping have destroyed fair market and as a result, native maize production.