Daily Biofuels Summary for October 1: New York Times, Wall Street Journal turn bearish on ethanol

Top Story: The New York Times says “the ethanol boom of recent years…may be fading” and pressure may be on presidential candidates to get behind corn ethanol as industry fundamentals turn sour. Industry watchers told the New York Times that problems are short-term, although consolidation is in the offing.

Producer News: Financing for new ethanol plants continues to become more difficult, according to the Wall Street Journal, with cancellations and delays becoming a norm, while a partner at Baker & McKenzie described some plants as “under death watch”….Willie Nelson-affiliated Earth Biofuels, in its latest SEC filing, expressed doubt over its ability to survive….Aventine Renewables said it has received the air permit for its Aurora, Nebraska plant. Construction is now imminent on the 226 Mgy corn ethanol plant….The Center of Excellence for Hazardous Material Management says it is 12 to 16 months from establishing a commercial demonstration plant for an algae-based biodiesel plant near Carlsbad, New Mexico….A2BE is seeking $5 million for an algae-based biodiesel research laboratory and expects to have a commercial-scale plant in 4 to 5 years.

International News: A two percent ethanol mandate went into effect in the state of New South Wales in Australia. Officials said that a higher mandate was possible after more local ethanol production comes online….A report from India points to rising demand from China as the source of rising world food prices. China, previously a food exporter, may become a net food importer this year….The Indian agriculture minister has called a meeting to coordinate efforts of ten sugar-producing Indian states regarding ethanol blending targets….The Petra group announced plans at the Clinton Global Initiative for a $136 million jatropha plantation and biodiesel refinery in the West Indies….Two Philippine-China biofuel farming deals collapsed this week, but Philippine Agricultural Secretary Yap will continue with his planned China trip. The Shanghai trip is to encourage further biofuels investments….The Canadian and Saskatchewan governments awarded $276,000 to the Saskatchewan Biofuels Development Corporation (SBDC) to develop market alliance workshops for producers and improve the organization’s website.

Research News: Rising prosperity in Asia and Latin America is driving prices for Canadian wheat to their highest levels in 30 year, according to the Globe & Mail. Biofuels have been widely blamed for wheat price increases.

Policy and Policymakers: Europe’s Renewable Energy Association is asking the UK’s Department for Business Enterprise and Regulatory Reform and the European Union to ban cheap imported B99 biodiesel coming from the US. The groups say that B99 in the US is benefiting from a $1.00 per gallon subsidy and a $1.80 per gallon excise tax rebate from the UK on imported biofuel. As a result, US-made B99 is available for $860 per tonne, vs the $1,114 price of raw rapeseed oil….The U.S. Department of Energy is resuming work on algae-based biodiesel. The National Bioenergy Center at the National Renewable Energy Laboratory in Golden is said to be nearing a cooperative research and development agreement.

Consumer and Fleet News: Even in Iowa, E85 is tough to find, and the general manager of the East Central Iowa Cooperative said “I don’t think flex-fuel even passes through someone’s head when they are buying a vehicle around here” and the sales manager of a Waterloo, IA Chevrolet dealership said that rising flex-fuel vehicle numbers are “mostly a coincidence” according to a report….Tidewater Barge Lines in Oregon is expanding biofuels distribution along the Columbia River via its new docking facility, which Pacific Ethanol is using. Barges are moving up the Columbia loaded with gasoline, and return carrying biofuels for the Portland market.

Financial News: Merrill Lynch & Co has launched the MLCX Biofuels Index to track seven commodities including sugar, corn and rapeseed as well as gasoline and diesel….The Biofuels Digest Indexâ„¢, a basket of 21 public biofuel stocks, fell 1.48% to 98.68 as ethanol giant Archer-Daniels-Midland led the sector down by dropping 1.69% to $33.08. Oil rose to more than $83 per barrel, boosting major ethanol stocks such as Pacific Ethanol (PEIX), Aventine (AVR) and VeraSun Energy (VSE). Environmental Power (EPG) lost 14.52% to close at $5.30 on morning news that its new offering of 5.4 million shares priced at $5.25 per share. Winners led losers 8 to 7, but solid gains on the biodiesel side with Nova Biosource Fuels (NBF) up 4.07% to $2.81 could not fully offset the downside influence of ADM. The broader markets were down slightly, with the Dow losing 17.31 points to close at 13895.63, the S&P down 4.63 to 1526.75, and the Nasdaq down 8.09 to 2701.50.

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