Pacific Ethanol Purchases Sugar From Government to Make Fuel

Pacific Ethanol Inc. (PEIX), a West Coast producer of the biofuel, said it bought raw beet sugar from the U.S. government to make the additive.

The company purchased 167 million pounds of sugar from the U.S. Agriculture Department’s Commodity Credit Corp. that it plans to blend with corn and that may yield about 12 million gallons of ethanol, Sacramento-based Pacific said in a statement today.

A plunge in sugar prices prompted the USDA to seek ways to dispose of surplus supplies used as collateral for government loans. In August the agency said Front Range Energy LLC, a Windsor, Colorado, producer, bought sugar.

“We expect this purchase of sugar to significantly lower raw material costs for the Pacific Ethanol plants and give us added flexibility and diversification in our feedstock sourcing,” Chief Executive Officer Neil Koehler said in the statement.

Pacific rose 5 cents to $3.56 today in Nasdaq composite trading. The shares have fallen 25 percent this year.

Raw-sugar futures for March delivery climbed 1 percent to 18.32 cents a pound on ICE Futures U.S. in New York.

Denatured ethanol for October delivery tumbled 4 cents, or 2.1 percent, to $1.91 a gallon on the Chicago Board of Trade. Futures have dropped 13 percent this year.

Corn for December delivery declined 2.5 cents, or 0.6 percent, to $4.39 a bushel in Chicago. One bushel of the grain makes at least 2.75 gallons of ethanol.

The December corn crush spread, or the difference between the cost of corn and a gallon of ethanol, was 1 cent at 5:02 p.m. New York time, data compiled by Bloomberg show.

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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