If you read the first layer of stories you would think that high corn prices did them in. Thanks to the WSJ below, you find out what did them in was betting that corn prices would stay high. Having won a few bets they began to think that the corn and ethanol markets move in only one direction.* Instead of reducing risk, it looks like they may have lost the farm. This is an often repeated story. In another sad side note, financiers decided to give Vera Sun a 125M line of credit this summer@. Imagine if they had invested that same money in GERS, we would now be rapidly applying a solution to ethanol industry problems - Corn Oil Extraction Systems. But the "experts" saw Vera Sun as the safe bet . . . Mean while back in reality - GERS is still providing the solution - abet slower than they could with adequate financing.@http://www.verasun.com/Press/details.cfm?ID=143
*WSJ online:
"In an effort to protect itself from rising corn prices, VeraSun locked in agreements to purchase corn at $6.75 to $7.00 a bushel, while the price on corn futures sank to $4 a bushel. In September, VeraSun said it had lost $63 million to $103 million due to bets on the price of corn that ended up working against it. VeraSun's current liabilities totaled $312 million at the end of the second quarter, and it had $1.4 billion in long-term debt."
^From the Verasun web site:
^"In December 2007, work began on an oil extraction facility at VeraSun Aurora utilizing a technology to extract corn oil from distillers grains, a co-product of the ethanol production process. The process is expected to yield 8 million gallons of corn oil annually from 390,000 tons of distillers grains. The corn oil will be made available for sale to the biodiesel market. One gallon of corn oil yields approximately one gallon of biodiesel, increasing the production of renewable fuels without creating additional feedstock demand.
SkunK
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