25 February 2009 00:05 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS news)--US ethanol producers should take advantage of available risk management tools, but the industry needs to take care to use them properly, a consultant said on Tuesday.
Coffin compared hedging to a dental drill, suggesting that results could be disastrous if the person handling the instrument was not trained to do so.
A failed hedging strategy was widely blamed for the demise of VeraSun, formerly the second-largest ?xml:namespace>
VeraSun filed for bankruptcy protection in October 2008, after making bad bets on the price of corn earlier in the year.
The company announced in February plans to divest most of its assets.
Coffin said ethanol producers should not panic by trying to avoid risk altogether.
Depending on the timing, risk can also be an opportunity, he said.
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