Investors Enjoying Ethanol's Recent Success

With all the ethanol frenzy surrounding the energy bill, ethanol stocks have greatly benefited. Pacific Ethanol shares have shot up 27.98% to $7.73 since the Senate passed its version of the bill last Thursday. Shares of Aventine and VeraSun have risen 12.93% and 8.5%, respectively. To add fuel to the fire, the White House has said that President Bush will sign the bill Wednesday. Commodity Futures have also swung towards ethanol's favor. March corn on the CBOT fell 6.75 cents today to settle at $4.32 per bushel. Meanwhile, January ethanol on the CBOT gained 2.4 cents to $2.13 per gallon as this is the ninth day in a row ethanol prices have gone up. As a result, ethanol's crush spread has hit $1.6552 which hasn't been this high for several months:

CBOT ethanol price
CBOT corn price
Crush spread
December 18th
December 15th
 $2.08  $4.38
December 10th
 $1.88 $4.17  $1.09
November 19th
 $1.81 $3.94  $1.12
October 16th
 $1.61 $3.74 $.77
September 1st
 $1.54  $3.69  $.62

Corn, which is trading at a very high price right now, is expected to trade lower in the coming days due to profit taking. With ethanol's recent success and favorable environment, it continues to be an appealing short term play. Since November 20th, Pacific Ethanol has jumped 73%, VeraSun 58% and Aventine 49%.


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