US ethanol has bright future despite current woes - ADM

03 February 2009 23:13  [Source: ICIS news]

HOUSTON (ICIS news)--US agriculture and biofuels giant Archer Daniels Midland (ADM) said on Tuesday its ethanol margins have collapsed, but the company remained optimistic on the biofuel for the long term.

ADM said ethanol margins were down due to oversupply, a slump in gasoline prices and an overall drop in motor-fuel demand.

“Ethanol now costs 40-50 cents/gal (€0.08-0.10/litre) more than gasoline,” an ADM executive said during a conference call over its second-quarter earnings.

ADM said the market was oversupplied even though nearly 21% of US ethanol capacity was shut down.

US ethanol capacity is at 12.9bn gal/year (48.8bn litres/year), but 2.7bn of that was off line, according to the company.

ADM said its fiscal second-quarter net earnings rose by 24% from a year earlier to $585m (€456m) despite weaker demand for bioproducts, particularly ethanol.

However, the company said it continued to see the biofuel as a good investment down the road.

($1 = €0.78)

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By: William Lemos
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