Friday, June 20, 2008

Three Quarters of Ethanol Plants to Shut Down?

[ADM CEO] Patricia Woertz- note to self:

1) Check bank lines.
2) Pat self on back for timing of June 3 $2 Billion equity units offering.
3) Lobby, lobby, lobby. Make old man Andreas* smile down on you.
4) Go shopping.

From MarketWatch:
Corn futures fell for a second day Friday on concerns that corn demand for ethanol production could drop sharply as falling profits for producers are likely to force nearly three quarters of ethanol plants to shut down.
As a result of the rapid margin deterioration, nearly 120 small to midsize ethanol producers "will be shut down over the next few months," said David Driscoll, an analyst at Citigroup, in a written comments released Thursday. There are currently about 160 ethanol plants in the United States, according to the Renewable Fuels Association. See full story.

The possible massive shutdown in ethanol plants could reduce corn demand by 750 million to 1.9 billion bushels a year, Driscoll estimated. That's more than half of this year's corn demand for ethanol use the USDA had expected earlier this month....MORE

From our 2007 post "Ethanol, Rent-seeking,ADM and God":

...Dwayne Andreas was a prodigious lobbyist. This from SourceWatch: "A Watergate-era investigation led to criminal charges that he had illegally contributed $100,000 to Humphrey's 1968 campaign for President, but Andreas was acquitted. And his $25,000 cash donation to President Richard M. Nixon's re-election bid in 1972 became a focus of Watergate inquiry into abuses surrounding unreported campaign money. According to an investigative memo uncovered in 1992 that quotes President Nixon's personal secretary Rosemary Woods, Andreas delivered $100,000 in $100 bills to the White House shortly before the 1972 election."
I've looked at love from both sides now.

Mr. Andreas' motivation was higher than just rent-seeking for ADM, The Washington Post noted in 1985 that "Andreas said he was raised in a religious tradition that called for 'tithing' 10 percent of personal income to the church. And, he adds, 'I consider politics to be just like the church.'"