July 26, 2008

US ethanol profits up as corn prices retreat

US ethanol distillers enjoyed a second week of rising profits as corn prices fell, analysts said.

Profits of ethanol production averaged 25 cents per gallon this week, up about 13 cents from last week, and up from weeks of losses before that, analysts said.

While flooding in the Midwest in June helped pushed corn prices near the US$7 level due to fears that large swathes of corn land may have been wiped out,  experts agree the drop in corn prices had little to do with supply and demand issues : investors pulling out of commodities helped push prices for the grain lower.

CBOT September corn futures closed just above US$5.73 a bushel on Thursday (July 24, 2008), down about 58 cents from the previous week.

Ethanol profits should be volatile for the rest of the year and move between 25 cents of profit per gallon to 25 cents of losses as corn prices fluctuate, experts said.

Also helping profits, prices for natural gas, have fallen on stronger US supplies.