Commodities, stocks plunge at Monday market open

Corn futures are on the verge of “limit down” at the opening of Monday trading – down 29 cents within a daily trading limit of 30 cents, by 9:30 CDT, as global stock markets opened sharply down in the aftermath of the Wall Street bailout bill, and bailout activities throughout Europe.

At 9:30am CDT, the December 2008 contract for Corn is trading at $4.25, with the July 09 contract trading at $4.66. The Dow Jones Industrials were down 4.32 percent to 9879.75 as of 10.40am in highly volatile trading. Losses had soared to over 5 percent shortly after market open, but were trimmed back to 3.77 percent by 11am.

The December 2008 contract for soybean oil was trading at 40 cents per pound, down $2.50.

According to Raymond James alternative energy analyst Pavel Molchanov, “Probably the most difficult financing climate has emerged for ethanol producers, which face the dual challenges of credit tightness and very slim margins due to high corn prices….Also, with most ethanol stocks near all-time lows, equity financing is also not a viable option now.  The silver lining of this capacity growth slowdown is that, under our commodity forecasts, we expect all four of the ethanol producers under our coverage to generate free cash flow in 2009 (though if current margins were sustained through 2009, that would not be the case).”

In early morning trading among pure-play ethanol companies, Aventine Renewable Energy (AVR) was down 22.02 percent to $2.02, VeraSun Energy (VSE) has fallen 20.48 percent to $1.67, and Pacific Ethanol (PEIX) is down 15.62 percent to $1.08.

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