Friday, November 21, 2008

Corn Prices Are Set To Come Down

From Minnesota Public Radio:

The collapse of VeraSun Energy is costing hundreds of Minnesota farmers millions of dollars. The Sioux Falls ethanol company filed for bankruptcy three weeks ago after losing almost $500 million since last summer. Now the company said it will terminate many of the corn contracts it signed with farmers. That's taking revenue away from farms as falling corn prices hurt their ability to make up for lost income.

VeraSun built two ethanol plants in southern Minnesota, but the bankruptcy made it impossible for the company to open the faculties near Janesville and Welcome.

Neither has produced a gallon of ethanol. But, in the months before bankruptcy, the company laid the groundwork to start the plants. VeraSun contracted with nearby farmers to buy millions of bushels of corn.

Now, it's refusing to pay on many of those contracts. Richard Guse said he has a half dozen VeraSun corn contracts. He said if the company breaks them he stands to lose a lot of money.

"I'm going to say my potential loss is two hundred to three hundred thousand dollars," Guse said.

Guse said under the contracts VeraSun agreed to pay him anywhere from about $5.00 per bushel to almost $8.00 a bushel. Since he signed the deals, corn prices have fallen sharply, to just over $3.00 a bushel."

Read or listen to the full article here.

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