Floods push corn prices to record
Midwest floods and persistent rains have washed away some corn crops, pushing prices to record highs. Jeff Tyler looks into how much ethanol has been affected and who might be hurt the most at the bottom line.
A corn field is submerged in flood water near Oakville, Iowa, on June 16, 2008. (Scott Olson/Getty Images)
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Scott Jagow: Now, let's talk about the price of ethanol. The floods in the Midwest have washed away some corn crops. That's pushed corn prices to record highs. So ethanol is going to be affected. The question is, how much? Here's Jeff Tyler.
Jeff Tyler: The flood-related jump in corn prices could hurt some ethanol producers more than others.
Bob Dinneen is CEO of the Renewable Fuels Association. It represents the U.S. ethanol industry.
Bob Dinneen: There will be some issues, but it will be company-specific. It's not an industry-wide event.
Verasun Energy is one of those specific companies. It's one of the largest producers of ethanol in the U.S., making about a billion gallons annually.
Spokesman Mike Lockrem says climbing corn prices are hindering growth.
Mike Lockrem: We are delaying the start-up of two of our facilities in Hartley, Iowa, and Welcome, Minn., due to current market conditions.
And it's more than just corn prices:
Lockrem: In today's market, ethanol is undervalued.
With ethanol prices low and corn prices high, the profit margin for producers is shrinking.
I'm Jeff Tyler for Marketplace.
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