This From Just Released Cardinal 2Q - 12 Aug 2010
Our corn oil production was below expectations for the quarter ended June 30, 2010. Corn oil prices decreased for the quarter ended June 30, 2010. Management attributes this decrease to the decrease in biodiesel production as a result of the expiration of the tax credit. We are currently operating significantly below the designed capacity of our corn oil extraction equipment. We are working with ICM, Inc. to fine tune the operation of our corn oil extraction equipment and hope to have the equipment operating at 100% capacity in the near term. (p.22)
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SkunK
PS Some might say this is old news. AND IT IS! The quote below is from the Cardinal Ethanol 1Q. THREE MONTHS AGO!
We are currently operating at 60% of the designed capacity of our corn oil extraction equipment. We are working with ICM, Inc. to fine tune the operation of our corn oil extraction equipment and hope to have the equipment operating at 100% capacity in the near term. (Cardinal Ethanol 1Q.p22)
SEEMS like CARDINAL has made no progress with the NON-Patented COES!
Notice the common thread. ". . . hope to have the equipment operating at 100% capacity in the near term."
By Golly! How long are the the stakeholders at Cardinal going to be satisfied with this "hope" that things will get better? ? How about pulling a "Marcus Energy" - and double your production for 20%. How about stop paying lawyers in the court room and start paying for technology on the work room floor?
If Cardinal had never heard of GreenShift they would still have these production problems. To twist a Reaganizm: "GreenShift is NOT the problem. They are the Solution!"
If they had never heard of a non-patented COES - and had gone with GreenShift - they would not be in court and would not likely have all these production problems.
Thursday, August 12, 2010
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4 comments:
"Understandably the cost of production and the cost of the end product will go up but will the demand for the product increase or decrease based on customer cost?"
As far as ethanol plants go, I think it varies depending on their business model. I know that GPRE locks in the purchase price of corn and the sale price of ethanol together only when it makes a profit. The margins are locked in well ahead of time with that company. The profits they made in Q2 were locked in, in Q1. Q3's margins were locked in Q2, and the profit they're making now will be reported in Q4. During the last CC they said they had some locked as far ahead as Q111.
With GERS, it seems they get 20% of the selling price of the oil no matter if the cost of production moves up or down. I think the demand will remain high because corn oil is still about $1.25 per gallon less than soy oil. So the demand is there and I don't think the cost of extraction will change very much.
Biodiesel producers are very eager to get this oil because they can make a profit even without the expired credit. If the credit is renewed, demand will surge along with the price of the oil. And like GPRE said, there's high demand from industrial customers at higher prices, but they must be assured of a constant supply first.
"Understandably the cost of production and the cost of the end product will go up but will the demand for the product increase or decrease based on customer cost?"
I think that's where the mandates come into the picture as that is what dictates demand. Ethanol is still cheaper than gas, it's actually the cheapest motor fuel in the world, even when the difference in mpg is considered.
Regardless of if the tax credit for ethanol expires or not, the mandates require an increase in demand. It increases about a billion gallons every year.
In my opinion, it just makes sense to build blender pumps, ethanol pipelines, corn oil machines, more ethanol plants, ethanol engines that get as good or better mpg than gasoline. These projects create lots of much needed jobs. The fuel we create cuts into our trade deficit as it makes our country stronger by sending less printed money overseas.
GPRE is a member of Growth Energy. What they are saying is to go ahead and phase out the tax credits, they go to the big oil companies anyway.
Instead, invest some of that money in ethanol companies and install blender fuel pumps(E-0, E-10, E-15, E-30, E85 all in two pumps) across the country. It gives consumers a choice.
The ethanol engines could have a major impact on the prices of ethanol. Down the road, we could see ethanol that's as much or more expensive than gasoline because they're based on mpg.
If we're serious about kicking our addiction to foreign oil, corn ethanol plants are the backbone. Cellulosic and algae fuels need to build onto the corn ethanol foundation. Raising the price of ethanol would allow these advanced fuels to be profitable.
Everything combined is the only way we'll kick our habit.
How about pulling a "Marquis Energy" - and double your production for 20%.
Good one, that's an awesome statement.
Your limit order to Buy 1290000 GERSD at 0.001 was received. Your order number is: 6643644142
Just an FYI that the 10-1 reverse split took about two-three business days to sort out on ETrade. For those who were confused by this, it appears to be taking some time, although no one should be shocked that it'd take a while to account for 13.6 B shares (as of last week, give or take).
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