July 1, 2011
BY Susanne Retka Schill
I write this as I’m still decompressing after FEW – the event of the year for the staff at Ethanol Producer Magazine. We learn a lot at the conference from the many excellent speakers and equally as much from the many conversations while moving about the expo and hallways.
One ethanol producer commented on how the margins have swung so much lately. In a space of a couple of weeks they widened by 50 cents when the corn market took a dive. That was the cash margin, of course. It would be interesting to know just how those with well developed risk management programs are faring in such a market. It appears the industry learned a great deal in the recent tough years, and individual plants are much better positioned and wiser today. I learned from accountant, though, that it can be very interesting when an ethanol plant’s investors include farmers who are interested in paying down debt and strategizing for the long haul and others who are more interested in a quicker return on their investments. Strong boards learn how to talk through those differences to develop their management strategies.
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Another gentleman, working for a big grain company, said he was keenly interested to see what will happen as the corn supply dwindles before the new crop comes off the field. He’s predicting ethanol yields will drop as old corn is coaxed out of the bin. I was intrigued that he said his company tries to get early indication of market response – from farmers. The farmers I know are always trying to figure out what Big Grain is doing. Some folks I talked to from Iowa are looking for a big corn crop, others are really worried about just how dire the impacts of wet conditions will be.
The FEW isn’t just about management and market tips, and updates on new technologies. I sat in on the panel presentations in the production track, learning a great deal about the details of ethanol production issues. The ethanol process is incredibly complex – even though the basic brewing technology is as old as civilization. What a challenge it is to fine tune the process. As scientists and engineers described many different strategies, products and services to coax another 1 or 2 percent increase in ethanol yield, I can appreciate just what a challenge it is for the ethanol producer to identify the best options for a particular plant.
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With my picture on the website and magazine, people quickly identify me. (And apologize if they don’t!) I am most grateful for the number of nice comments about our work. We try hard to cover this industry with the attention and intelligence it deserves. Attending the FEW confirms for me the dedication and sincerity of all the folks who work in this industry.
Our coverage of the week was heavily weighted towards the FEW, but there was some other news in the ethanol industry. EPA released its E15 label, and to the relief of the industry, it did not include alarming cautionary language. There’s much to do, though, before E15 gets used on the regulatory and marketplace fronts. In other news, Dupont Danisco Cellulosic Ethanol announced Lincolnway Energy at Nevada, Iowa, will be the location of their first commercial-scale corn stover-to-ethanol plant. DDCE has forgone the loan guarantee game so far, but they certainly have tapped into state programs in Tennessee, and now Iowa, to support cellulosic ethanol development. Kris also wrote about Bluefire's progress in getting groundwork underway on their project in Mississippi as they anticipate closing on financing.
Flying in and out of Grand Forks, it was rather shocking to see how much water is standing in the fields. I saw a weather analysis that showed the entire Northern Plains and nearly all of the Corn Belt are very wet. We’ll soon be talking about disease concerns again. Hope you all had a great Fourth of July weekend, and that the rains stayed away from your parade or picnic.