US BioEnergy has released its third quarter numbers which show an improvement on the prior quarter. A lot of this is down to the firm's hedging strategy which has seen the effective price it has paid for corn in the quarter fall from $3.58/bushel to $3.15/bushel and so increased the revenue it generates from each gallon of ethanol it sells. The opposite was true in the second quarter where hedging operations increased the cost of corn by $0.18/bushel.
Hedging the price of corn is an important part of the more sophisticated ethanol producer's armoury. The problem is that what you wins on the swings you loses on the roundabouts, its just that you don't win quite so much or (ideally) lose quite so much as you would do if you didn't hedge.
Hattip to Energy Refuge.com