Alto Ingredients Inc (ALTO)

[asianmermaid]

FYI the production margin for PEIX today (according to the sources I use to calculate it) hit $0.735. It's dropped substantially in the past 3 days That's calculated using the formula PEIX provided in their June presentation. It accounts for co-products, LA terminal prices and the cost of corn plus basis.

The formula is included and fully explained in the Notes to the weekly summary I post every Monday.

Keep in mind that the formula uses assumed factors and that those factors actually vary in practice. Also keep in mind that it uses the CBOT front-month corn price, whereas PEIX buys their corn at spot prices. Also keep in mind that any application of that number can not factor in when actual sales and purchases are made. At best, any production margin (or crush margin) is an approximation for the purpose of estimating earnings. Also keep in mind that it does not price in Plant and other operating costs. It's only a gross profit number based on the costs of materials vs sale price of goods.

Finally, it only accounts for plant operations. Kinergy is another entirely different animal. Some of Kinergy's profit margins are fixed (indexed, prearragned sales) whereas some are most definitely not (the buying and re-selling of ethanol).

First, thank you for your reply, Rule62.

I saw your postings of the notes on Mondays and I really wanted to contact you about it already, as I somehow I can't see the picture enlarged, as even clicking on it it still shows me a thumbnail sized picture. Even zooming into it I can't read any data. Please tell me what I am doing wrong, I'd really like to see your calculations.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=106040138

I went to PEIX homepage and looked for the crush margins, I found them in the 2nd quarter results:

http://ir.stockpr.com/pacificethanol/press-releases/detail/324/pacific-ethanol-reports-strong-second-quarter-2014-results


Commodity Price Performance

Three Months Ended
June 30, Six Months Ended
June 30,
2014 2013 2014 2013

Average ethanol sales price per gallon $ 2.78 $ 2.79 $ 2.75 $ 2.69
Average CBOT ethanol price per gallon $ 2.25 $ 2.53 $ 2.23 $ 2.47

Corn cost – CBOT equivalent $ 4.84 $ 6.55 $ 4.67 $ 6.85

Looking at this data, the margin crush was average $ 1.05 for the 2nd quarter. Taking your calculated data of $ 0.735 as of today, it confirms my calculations of being 30% lower now. I know that my numbers were wrong in the details, especially for PEIX selling at Ethanol at a higher price, but they helped me to see the approx. decline percentage wise.

I hope that this and next week we can get some more data on this from the PEIX and REX presentations from the conferences.