So What is a Decent Investment These Days?

[JoseCuervo]

BigWhore,

Do you have any "meaningful" examples of "pork" in the bill? Every time the Taliban-type Republicans get on TV and try to call it "pork", they get embarassed when they admit there isn't much that is "pork". One GOP governor was trying to say Embassy funding was pork....

 

[smalls]

Hey Josechsr, I am glad you've mastered the art of cut and paste.

Even without googling "Ethanol industry collapse" and finding the articles you cite I will respond. Your "research" clearly displays that ethanol margins are not continuous and guaranteed, I can live with that. But it is disingenuous to not put those comments into the context that cash corn prices were at $7.00+/bushel, that many ethanol producer bought future inventory poorly, and that demand for all fuel products suffered last summer. Without knowing definitively I would guess that "premium" gasoline, where ethanol blends are much more common, had even more demand destruction than low-grade.

Since last summer, corn is worth roughly half of what it was, a President was elected from a party that tends to be friendlier to renewable energy and gasoline prices are much lower. The federal subsidy now represents a much larger proportion of rebate to ethanol producers. Now with petro-gasoline prices rising by the day, margins for ethanol are improving at an equal pace.

Even in your own article, simple arithmatic proves that ADM has still posted a gross profit with their ethanol production over the last two years. And as far as that $111 million number goes, try googling what ADM's margin calls were last year on commodities. My guess is that they had individual weeks where they lost more money on margin calls than their annual loss of ethanol plant operations.

In my original statement, I said I am no fan of ethanol. The fact that it is so highly subsidized is the reason for that dislike, as examplafied by the 30:1 taxpayer cost to profit ratio. However, if the government is going to dangle it out there, one has to take it into consideration of a business' viability.

So you have quite eloquently proven that ethanol sucked last year, and that some businesses even failed (something that has never happened to a steel company, car company, bank or law office...). However, you ignore that the landscape is different from last year to this year and the fundamental components have changed.

 

[noharleyyet]

...stay down Gunner.

 

[JoseCuervo]

NoHarley,

You might be right...... This thread has became Wacky Wednesday where UP is DOWN, and RIGHT is LEFT, and GOOD is BAD,......

Schmalts has FARM GROUND being called RAW LAND...

Smalls says corn is doing well, ignoring the fact it has fallen by half.

Smalls says Ethanol has not burst, despite the fact the biggest producer is bankrupt, the small ones are bankrupt, the big companies in the business are losing 100's of millions of dollars in an industry described as "collapsed".

You are right, I can't understand the logic on Wacky Wednesday......

 

[smalls]

Smalls says corn is doing well, ignoring the fact it has fallen by half.

Smalls says Ethanol has not burst, despite the fact the biggest producer is bankrupt, the small ones are bankrupt, the big companies in the business are losing 100's of millions of dollars in an industry described as "collapsed".

Jose, although corn has fallen by half from historic highs last year, caused by an incredibly weak US dollar, rampant commodity speculation and low domestic carryout, $4.00 corn will still pay the bills for a farmer. Especially considering they are going into this growing season with fuel nearly half of what it was a year ago and fertilizer less than half the cost it was a year ago. In addition, used machinery has taken a huge hit. I don't believe we'll see any reduction in land costs compared to last year, but it is concievable that the 09 crop will cost 30% less to put in than last year.

I would bet you Jose that ethanol plants turn a profit in 09. As the ethanol industry is in its infancy, there will be a massive amount of consolodation to occur across the industry and your dinky coops will continue to die as the goliaths of industry continue to increase market share. If you judge the future of all industries based on their performance last year, the only industry left would be collectors and repo agents.

 

[cjcj]

...stay down Gunner.

 

[Steiny]

I live smack in the middle of ethanol and corn country and do lots of building for the big players in those markets. Our best ethanol client says they are fine, not making much money at it right now, but it's holding its own and all three of their plants are producing at full steam. They are involved in several sectors of the agricultural industry, so ethanol isn't likely to make or break them. They believe it will be a long term, viable business and intend to stay in it.

Also, despite all ot the economic doom and gloom going on, the big time Ag players, seed plants, fertilizer, etc. are making money, expanding, and going strong. It is one of the brighter spots in the economy around here presently.

If you know anything about corn prices, they held for about 15 years around the $2.00 per bushel mark and folks in the business managed to make money, expand, etc. Although they'd like to see $7.00 corn like they did a little while back, the smart ones all knew that wasn't going to last, they pocketed the windfall profit, and they are content with $4.00 corn.

 

[Calif. Hunter]

My apartments are giving me a 12% return.... former homeowners/now renters.

Sorry - I don't know shit about corn.

 

[MarvB]

Sorry - I don't know shit about corn

...other than the two are synonomous coming morning....

 

[noharleyyet]

Sorry - I don't know shit about corn

...other than the two are synonomous coming morning....

...sounds like a good start to a hit country song Marv...or Elvis's last thought.