September 11, 2008
Record high corn prices causes frenzy in ethanol industry in US
Until the wholesale price of ethanol becomes more in line with ethanol futures, ethanol producers could be back to relatively thin margins even with high petrol prices.
Director of Research at bio-fuel manufacturer Allendale Inc, Rich Nelson, has questioned whether lowering corn prices will stimulate demand for ethanol use.
Most of 2008 plants have only seen a 10-20 percent increase on investment, possibly reflecting investors' sentiments that corn prices have not dropped enough to offset ethanol prices.
New-crop corn use for ethanol is expected to be only 4 billion bushels, lower than the USDA's August estimate of 4.1 billion bushels.
