25 July 2012 17:20 [Source: ICIS news]
SANTO DOMINGO, Dominican Republic (ICIS)--Archer Daniels Midland (ADM) said on Wednesday it will increase prices on all of its industrial ethanol prices by 75 cents/gal (€0.16/litre), effective on 1 August, or as soon as contracts allow, citing a recent increase in US corn prices brought on by drought.
"This price increase is due to the unprecedented increase in the cost of corn, which has skyrocketed by more than 40% since early June, as searing heat and drought conditions in the midwest began to threaten the yields of what should have been a record harvest," ADM said in a letter to its customers.
ADM's price increase was expected, following a 75 cent/gal price increase announcement from ethanol producers Grain Processing Corp (GPC) and MGP Ingredients, which also cited the drought in the US and higher corn prices.
ADM also said in its letter that coupled with the lowest corn carryover in 16 years, it does not expect to see much relief from the higher costs for the next year.
Buyer reaction to the increases has been thin thus far.
The proposed increases were a drastic change from mid-June, when buyers and producers were pointing to a likely rollover for the third quarter.
Second-quarter ethanol contracts were settled at $3.74-3.84/gal for 200 proof ethanol and at $3.54-3.64/gal for 190 proof ethanol, flat from the first quarter.
($1 = €0.83)
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