Ethanol plants shut on record corn price: Citi
Friday June 13, 10:34 am ET
NEW YORK (Reuters) - Record corn prices pushed up by flooding in the Midwest have forced five small to mid-sized U.S. ethanol plants to shut and output of the biofuel could be slowed for months, a Citi research note said on Friday.
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Storms this week have dumped rain on crop fields across the Midwest, where much of the world's food is grown. Corn prices have shot to a record near $8 per bushel, nearly double last year's price.
As much as 2 billion to 5 billion gallons of ethanol "could go offline in the next few months due to high corn prices," the note said. The United States has an ethanol production capacity of about 8.8 billion gallons per year from 154 distilleries.
"Corn prices have witnessed a structural shift, and are now confronted with near-term supply concerns associated with flooding in the Corn Belt," said Ron Oster, an analyst at Broadpoint Capital in St. Louis.
The Citi report did not say which companies had shut plants.
Citi has downgraded investment ratings on pure ethanol producers VeraSun (NYSE:VSE - News) and BioFuel Energy (NasdaqGM:BIOF - News) to "sell" from "buy."
(Reporting by Timothy Gardner; Editing by Walter Bagley)
