June 11, 2008

US ethanol stocks shrink as corn yield estimates weaken

US ethanol stocks declined on Tuesday (June 10, 2008) after the USDA lowered its corn yield forecast to 11.7 billion bushels from May estimate of 12.125 billion.

JPMorgan analyst David Silver said the latest USDA data will weigh on shares of ethanol producers due to implications of higher corn costs.

Silver explained that lower projected corn yields, lower forecasts for ending stocks for corn and the related implications of lesser supply will likely lead to higher US corn prices.

Shares of Green Plains Renewable Energy slumped 7.1 percent to US$7.32, Verasun Energy Corp. dropped 5.1 percent to US$5.60 and Aventine Renewable Energy fell 3.7 percent to US$5.17.

Pacific Ethanol Inc. also dropped 2.3 percent to US$3.01 and Biofuel Energy Corp. declined 3.7 percent to US$4.19.