June 16, 2008
US ethanol plants close after recent corn price hikes
Five small-to-mid-sized ethanol plants in the US shut down due to record corn prices brought about by flooding in the Midwest, Citigroup said Friday (June 13, 2008).
US corn prices have shot to a record near US$8 per bushel, almost double from last year's price as rains hit corn crop fields in the Midwest.
The research indicated that due to the plants' closure, around 2 billion to 5 billion gallons of ethanol could go offline in the next few months.
The US has an ethanol production capacity of about 8.8 billion gallons per year from 154 distilleries.
Ron Oster, an analyst at Broadpoint Capital in St. Louis, pointed out that corn prices have witnessed a structural shift and are now confronted with near-term supply concerns.
The report did not say which companies had shut plants.
Citi has downgraded investment ratings on pure ethanol producers VeraSun and BioFuel Energy to "sell" from "buy."