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Ethanol and Oil&Corn Prices
Hi All,
I bought Verasun Energy (VSE)the beginning of this year at exactly $17 in anticipation of Bush's speech which involved supporting ethanol production. The stock shot up to $20 but unfortunately came crashing down again today due to them posting a loss of $312,000 (0 cents/share) as opposed to an expected profit of 11 cents/share. Apparently, the loss is due to corn prices and higher than expected costs on building a new ethanol plant. I feel dumb, because Im an International Economy major, and of course knew all about corn prices going up. Im even doing a report on Ethanol in Brazil, I just had forgot to correlate that to my stocks. Anyways, my analysis is that corn prices are going to retreat in the coming year while oil prices continue to go up this summer and level off in fall. Im more sure of the corn price, because of the massive planting that was done this year, which should cause a rather big surplus assuming crops grow well, and of course corn prices should drop back down. Of course, I have no idea how hedged VSE is among other things. Does anyone have an opinion on the ethanol sector right and any opinions on short term/long term or just on corn/oil prices? Thanks much [img]/images/graemlins/smile.gif[/img] |
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