CEO of Renewable Fuels Association says ethanol prices are “at or near a bottom”

In New York, Bob Dinneen, CEO  of the Renewable Fuels Association, said ethanol prices are “at or near a bottom”, and said he expected to see an increased renewable fuel standard in the final energy bill now before the US Congress.

Dineen, in a call with Citi analysts, said that overcapacity has delayed new construction, but that he he expected that Florida, Georgia, California and Midwest markets alone to require up to 5.5 billion gallons per year of ethanol, based on new blending mandates.

US legislators are currently in conference on the Energy Bill. The primary issue facing the government this year is establishing clear targets for mandated biofuel consumption. Biofuels producers and marketers argue that consumers tend to act on price rather than public policy goals; with biofuels prices not offering a strong price incentive for switching, mandates will be necessary to provide a stable demand outlook necessary to justify long-term capital investment in plants, machinery and infrastructure.

Meanwhile, ethanol is retailing at $2.40 per gallon with producer prices hovering at around $1.50.

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