Biofuels Digest Indexâ„¢ (BDI) up 1.90 points as ethanol outlook improves, credit worries rise

The Biofuels Digest Indexâ„¢ (BDI), a basket of 21 major public biofuel stocks, rose 1.89% percent today to 102.23 as an improved outlook for ethanol overshadowed increasing worries about the credit market that dragged down the market as a whole.

This morning, Lehman Brothers analyst Mansi Singh upgraded shares of ethanol producers Aventine Renewable Energy Holdings (AVR), and VeraSun Energy (VSE) to “Overweight” from “Equal Weight”. Singh also upgraded the ethanol sector from “Neutral” to “Positive”.

In setting price targets of $20 for Aventine and $17 for VeraSun, Singh cited a combination of steady corn prices, rising ethanol prices, and the expectation of favorable energy legislation could result in a 50% increase in share value.

Sector giant Archer-Daniels-Midland (ADM) was up 2.1% to $33.59, while VeraSun rose 3.35% to $12.65 and Aventine rose 3.36% to $14.16 following the Lehmans move.

Biofuel small caps generally drifted lower, with Texcom (TEXC.PK) down 10% to $0.18, Alternative Energy Sources (AENS.OB) down 4.88% to $0.78 and Xethanol (XNL) down 4.76% to $1.00 in light trading conditions.

Among the larger cap stocks, Andersons (ANDE) was down 1.0% to $46.63 and Pacific Ethanol (PEIX), was up 1.1% to $11.51, with the Lehman letter the major factor in the jump.

The broader markets were down slightly at close, with the Dow Jones industrials down 0.4%, or 50.56 points, to 13,238.73, while the S&P 500 was dpwn 6.14 points to close at 1457.64%. The Nasdaq managed a small gain for the day, up 2.14 points to 2565.30.

Major news from Biofuels Digest Indexâ„¢ stocks included top management changes at MGP Ingredients (MGPI), and a report that A-D-M spent almost a half million dollars on lobbying efforts in the first half of 2007.

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