Ethanol plants reopen as record corn harvest boosts margins
U.S. ethanol plants that have been shut for as many as five years are now coming back online as a record U.S. harvest has pushed down corn prices and improved profit margins for makers of the biofuel.
Agribusiness giant Cargill Inc on Monday said it restarted a plant in Fort Dodge, Iowa, that the company purchased in 2011 from corn processor Tate & Lyle.
The announcement came as Noble Group Ltd said it will soon restart an Indiana ethanol plant that was shut for a year while another facility that was idled for five years in Ohio came back online last month.
U.S. farmers are gathering a corn crop expected to reach a record 14 billion bushels. The big harvest is replenishing stockpiles diminished by 2012's blistering drought and pressuring benchmark Chicago Board of Trade corn futures to the lowest levels in three years.
Ethanol margins are the highest since late 2009 - the last year of a record corn harvest - as ethanol makers turn profits buying corn and then selling the biofuel as well as byproducts such as distillers grains and corn oil.
Minneapolis-based Cargill, a top U.S. ethanol producer according to the Renewable Fuels Association, will eventually produce 115 million gallons yearly at the Fort Dodge plant.
"When full production capacity is reached, the plant will consume 150,000 bushels of corn a day and turn out five products, including dextrose, ethanol and SweetBran feed for cattle," Al Viaene, manager of Cargill's Fort Dodge plant, said in a statement.
Cargill, with annual sales of $136.7 billion in the fiscal year that ended May 31, also produces ethanol at plants in Blair, Nebraska, and Eddyville, Iowa.
Noble Group was revamping a plant in South Bend, Indiana, with an annual capacity of 100 million gallons that should restart early in 2014. Liquidators purchased the facility at auction in January for $2.5 million and then sold it in July to Noble Americas, a subsidiary of the Hong Kong-based Noble Group.
"They want to get going as fast as possible. They are planning for the first quarter, certainly by the end of March," said Chris Fielding, the director of business development for the city of South Bend.
Noble Group did not return requests for comment.
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