The plant has the capacity to produce 88 million gallons of ethanol annually, Christopher Standlee, a spokesman for the company, said in a telephone interview today. Seville-based Abengoa doesn’t know how long it will be idle, he said.
Standlee said the company decided to idle the plant during routine work after the worst U.S. drought in 56 years scorched cornfields and raised the cost of producing the biofuel.
Denatured ethanol for October delivery slipped 0.4 cent to $2.34 a gallon at 1:03 p.m. local time on the Chicago Board of Trade. Futures have gained 6.2 percent this year.
Corn for December delivery rose 1.75 cents to $7.58 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
Based on December contracts for ethanol and corn, plants are losing about 41 cents on each gallon of the biofuel produced, data compiled by Bloomberg shows. That doesn’t include profit from the sale of dried distillers’ grains, a byproduct of ethanol production that can be fed to livestock.
Biofuel Energy Corp. (BIOF), a U.S. ethanol producer partially owned by venture capitalists David Einhorn and Daniel Loeb, shut its 115 million-gallon-a-year plant in Fairmont, Minnesota, because of poor profit margins Sept. 24.
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