Biofuels Stock and Financial Outlook for September 17

Stocks are expected to open down this morning based on lower stock futures, and a general anticipation that Tuesday’s Federal Reserve announcement on interest rates would drive market prices this week.

In the biofuels sector, the executive director of the U.N. Environment Program said that linking biofuel crop demand and higher commodity prices was only speculation at this stage. He said that further study would be required to firmly establish such a linkage, noting that it is not likely that biofuel demand is responsible for the increase in Italian pasta or Mexican tortilla prices. However, The American Meat Institute has joined a coalition of dairy, egg and turkey lobbyists to fight ethanol mandates, and has launched a website to promote its view.

The Biofuels Digest Indexâ„¢ (BDI), a basket of 21 major public biofuel stocks, fell 1.49% on Friday to 98.09 as a weeklong biofuels selloff continued, as credit concerns and weak retail sales jarred the broad markets but negative investor sentiment about biofuels stocks pulled the sector further down than the market as a whole.

Among the larger cap stocks, Aventine (AVR), US BioEnergy (USBE) and VeraSun Energy (VSE) were all down more than 2%, while among small caps Texcom (TEXC.PK), New Gen Technologies (NWGN.OB) and Xethanol (XNL) fell more than 10% on the day.

Leading the winners was the small-cap Green Energy Resources which rose 11.1% to $0.20. The BDI was down 1.7% for the week and nearly 5% since August 4th.

In the broader markets, the Dow Jones industrials rose 17.64 points to 13,442.52, the S&P 500 was up 0.30 to close at 1484.25 and the Nasdaq was up 1.12 to 2602.18. Investors are now fully expecting an interest rate cut as soon as next week.

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