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Valero Restarts Production at Ethanol Plant as Output Costs Ease

Valero Energy Corp., the third- biggest U.S. ethanol producer, resumed output at an Albion, Nebraska, plant because it’s now profitable to make the biofuel.

The company idled the mill, along with one in Linden, Nebraska, and another in Bloomingburg, Ohio, after high corn prices amid the worst U.S. drought since the 1930s raised production costs.

Corn futures are in the longest slump in 32 years, falling for a ninth session today on the Chicago Board of Trade. March- delivery corn slid to $6.955 a bushel today, down 17 percent from a record settlement of $8.3875 on Aug. 21.

“We’re hopeful that margins will improve soon at Linden and Bloomingburg,” Bill Day, a spokesman for Valero in San Antonio, said in an e-mail. “Those plants will be restarted when it’s economic to do so.”

Denatured ethanol for March delivery declined 2 cents, or 0.8 percent, to $2.367 a gallon on the CBOT. Prices have risen 8.1 percent this year and are up 5.9 percent from a year ago.

The corn crush spread, the profit that can be made from turning a bushel of corn into ethanol, was minus 16 cents today. It was minus 14 cents yesterday, the highest level since June.

Southwest Georgia Ethanol LLC, another company that idled operations because of corn prices, plans to restart output at a mill in Camilla, Georgia, in July as the local harvest begins, Larry Kamp, the company’s chief financial officer, said today.

Production Rises

Production of the fuel last week rose 1.9 percent to 789,000 barrels a day, the biggest jump in five weeks and the highest level since Jan. 18, the Energy Information Administration said in a report today.

Output in the week ended Jan. 25 fell to 770,000 barrels a day, the lowest since the Energy Department’s statistical agency began tracking weekly data for the additive in June 2010.

That helped drain a glut of the fuel as stockpiles last week plunged 3 percent to 19.5 million barrels, the lowest level since Nov. 30 and the steepest drop in 11 weeks, EIA data showed.

Archer Daniels Midland Co., in Decatur, Illinois, is the largest U.S. ethanol producer, followed by Poet LLC, in Sioux Falls, South Dakota, according to data from the Renewable Fuels Association, a Washington-based trade group.

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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