Is VeraSun Decision Another Nail In The Coffin For US Ethanol?
US corn growers are angry with VeraSun's decision, backed in court this week by US Bankruptcy Judge Brendan Shannon, to cancel contracts to buy corn through to Jan. 15 at seven of it's sixteen US plants. The company has also said it will cancel through to the end of Jan. at an eight plant.
Certainly, any farmers with corn sold to VeraSun at substantially higher levels than today's rates are going to be hopping mad. But the knock-on effects could have wider implications for the entire ethanol industry.
"This really has a lot of farmers upset," said one analyst. "What it is doing is creating a climate of distrust among farmers with ethanol plants because VeraSun is not the only organization that manufactures ethanol that is having difficulties right now."
Could this be the beginning of the end for the US ethanol industry? It could certainly be a factor in helping farmers with their planting decisions next spring. What's the point of growing corn? Inputs are way higher than soybeans. The market for crude oil has fallen out of bed. Gas at the pumps is cheaper without any ethanol blend than with. And if you do sell to an ethanol producer and the price comes down then they can just cancel the contract.
What would you do?
Certainly, any farmers with corn sold to VeraSun at substantially higher levels than today's rates are going to be hopping mad. But the knock-on effects could have wider implications for the entire ethanol industry.
"This really has a lot of farmers upset," said one analyst. "What it is doing is creating a climate of distrust among farmers with ethanol plants because VeraSun is not the only organization that manufactures ethanol that is having difficulties right now."
Could this be the beginning of the end for the US ethanol industry? It could certainly be a factor in helping farmers with their planting decisions next spring. What's the point of growing corn? Inputs are way higher than soybeans. The market for crude oil has fallen out of bed. Gas at the pumps is cheaper without any ethanol blend than with. And if you do sell to an ethanol producer and the price comes down then they can just cancel the contract.
What would you do?