Maggss22

VeraSun Energy:Buyout Candidate, If Obama Wins

To say that VeraSun will only remain in business or become a buyout candidate if Obama wins is quite a stretch. For one McCain has backed away from his stated opposition to corn based ethanol, and has embraced all forms of renewable fuel technology.

On the flip side, Obama may state that he supports continued subsidies for ethanol, but when it comes right down to it that support may waiver when and if we face an actual crop production disaster.

So far, as we head into harvest, production appears to be near or around average. The fear of a production downturn alone sent corn prices higher, to above $8.00 on the July 2009 futures. What do you believe would occur if a true production disruption were to take place?

The fact remains we need to find ways to support the plants currently in operation, but to believe that the corn based ethanol business will continue to grow is realistically impossible. The corn demand base for ethanol and other industrial products is close to its peak. It may not be long before we are forced to choose between using corn for ethanol or using it for livestock feed and exports.

As we stand right now 2009 could be a far more interesting year than 2008 in both the corn and soybean markets. We may not have enough tillable acres to cover the continued increase in demand. Coupled with an increase in demand and input costs on the farm, we could witness quite the downturn in corn production, or at least a significant downturn in ending stocks driving corn prices drastically higher.

To place VeraSun's survival solely on the back of an Obama presidency, as I said earlier, is quite the stretch. There are an awful lot of outside factors at play when looking at the future of VeraSun and other ethanol plants alike.