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Bunge-Ergon Vicksburg LLC to Idle Mississippi Ethanol Plant

Bunge-Ergon Vicksburg LLC plans to idle its Mississippi ethanol plant by Nov. 30 because of poor margins to make the biofuel.

The mill in Vicksburg, Mississippi, can produce 54 million gallons of the fuel annually and may be closed until next year, Jim Temple, a spokesman for Ergon, said in a telephone interview.

Corn prices have surged 15 percent this year, increasing the cost of producing the biofuel, as the worst U.S. drought in 56 years baked crops. Abengoa SA (ABG) idled its plant in Madison, Illinois, this month and Biofuel Energy Corp. (BIOF) shut its 115 million-gallon-a-year plant in Fairmont, Minnesota, citing poor margins on Sept. 24.

Denatured ethanol for November delivery gained 2.1 cents, or 0.9 percent, to $2.406 a gallon at 11 a.m. on the Chicago Board of Trade. Futures have gained 9.2 percent this year.

Based on December contracts for ethanol and corn, producers are losing about 30 cents on each gallon of the biofuel made, according to data compiled by Bloomberg. That doesn’t include profit from the sale of dried distillers’ grains, a byproduct of ethanol production that can be fed to livestock.

Ethanol production in the U.S. has fallen 17 percent this year to 801,000 barrels a day in the week ended Oct. 19, Energy Department data shows.

The Vicksburg distillery is a joint venture between Ergon Inc. and Bunge Ltd. (BG)

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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