That bountiful corn crop is going to turn into profits for Green Plains Renewable and others.
One of the hit songs from the 1943 Rodgers and Hammerstein musical Oklahoma! describes corn that is "as high as an elephant's eye." It's not a bad image for the 2009 corn harvest, 13.1 billion bushels plucked off 86 million acres. This was not entirely a blessing for farmers, since bumper crops come with depressed prices. But it was good news for the beleaguered ethanol industry.Thanks to congressional politics, the corn ethanol industry has been through a dramatic boom and bust in recent years. Initially favored by Senator Robert Dole and then promoted as a self-sufficient "green" source of energy independence, ethanol may or may not make the atmosphere more carbon-free. What is not in doubt is that it is federally required....
...The profitability of the ethanol business depends on the so-called crush spread, the price difference between a gallon of ethanol and the corn that goes into it. The crush spread got crushed. In November 2008 VeraSun, a high-flying new issue from 2006 and then the second-largest producer of fuel ethanol, filed for bankruptcy. In May 2009 Pacific Ethanol, (PEIX) a producer funded by Bill Gates' Cascade Investments, followed suit. Aventine Renewable Energy also collapsed that spring.
What didn't change was the federal mandate. The U.S. consumes 138 billion gallons of gasoline per year. The government has decreed that "renewable" sources contribute 13 billion gallons in 2010, rising to 14 billion next year and reaching 20.5 billion in 2015....MORE