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Green Plains Inc. Message Board

  • technical_rules technical_rules Mar 19, 2013 5:53 PM Flag

    This is why the insiders are dumping stocks

    Say goodbye to positive margins. GPRE may report losses again very soon just like early last year. Big whales like Valero dumping billion gallons of ethanol to the market will make sure there is no profit left. And Valero will also compete in the tight supply market and make it harder for GPRE to get sufficient supplies to produce ethanol too.
    CHICAGO--Valero Energy Corp. soon will have all 10 of its ethanol plants online and operating "at or close to capacity," after it idled three of them last year due to low or negative margins.
    Valero restarted its plant in Albion, Neb., around the start of the year. Its Bloomingburg, Ohio, plant restarted at the beginning of March, and the company expects to restart its Linden, Ind., plant in the next week or so, company spokesman Bill Day said Monday.
    According to the company's website, the 10 plants have a total capacity of about 1.11 billion gallons of ethanol a year.

    Sentiment: Strong Sell

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    • The yo-yo cycle is swinging back to excess production, and it will kill profits and put GPRE right back to heavy money losing just like early last year.

      Sentiment: Strong Sell

    • a) keep checking the spreads, you will see that the positive margins are NOW there for the operating companies, BETTER than someone who has to staff-up to re-start a plant.
      The person restarting a plant does not have corn, and is bidding it up.

      b) the compnay already operating can run at a higher capacity with the same staff. This is is called 'efficiency'/

      c) Spring and Summer driving will require more fuel... just a seasonal thing, you know. In this case, Valero is just stepping up to top-off the supply line. This does not mean the folks already running will be out of the game.

      d) There is only so much corn - remember the drought; so ony so many folks will be abe to run. NOT ALL plants will have the cash, notr the supply to run until next harvest when RFS 2014 will then be another story..

      Read EIA data tomorrow. This will help.

      • 1 Reply to elahens
      • Apparently Valero has no problem staffing up at all. It already has most of the plants running. The yo-yo productions will now swing back to excess productions very soon. And yes, Valero will compete with GPRE on both the supplies and final products. GPRE will go back to losing money just like early last year. And that is why insiders are dumping shares.

        Sentiment: Strong Sell

    • Great post and insightful info - this would be a difficult long position hold!

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