NEW YORK, NY--(Marketwire - Nov 2, 2012) - Ethanol stocks have struggled in recent months as surging corn prices have resulted in negative profit margins for producers. The worst drought in over 50 years in the Midwest has seen prices for corn surge 25 percent according to the World Bank. The Paragon Report examines investing opportunities in the Ethanol Industry and provides equity research on Pacific Ethanol Inc. (
According to data compiled from Bloomberg companies are currently losing approximately $0.33 on every gallon of ethanol produced, based on December contracts. Beginning in late September major producers such as Valero Energy, Abengoa SA, and Biofuel Energy have idled output as a result of poor profit margins. Help may be on the way for ethanol producers as Novozymes, a Danish industrial enzymes maker, recently launched an enzyme they say produces more ethanol from less corn.
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Novozymes Avantec enzyme can "squeeze an extra 2.5 percent of ethanol out of the corn," the company said. According to Novozymes executive vice president, Peder Holk Nielsen, "If all ethanol plants in the US started using Avantec, they would save 3 million tonnes of corn."
There has been pressure from the United Nations on the U.S. to ease their ethanol mandate, which diverts four of every 10 domestic bushels of corn for ethanol production. The mandate equates to roughly 15 percent of global corn production, which the UN believes should be used to ease world hunger.
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