Farmer Tom

Verasun Energy: Thin Margin Co's Are One Bad Economic Turn Away from Disaster

Not to be unkind but to blame this fiasco on a commodity market collapse is far too generous. If one wishes to speculate on price direction of a commodity they don't require 16 plants and two billion dollars worth of stainless and concrete. To lift hedges on corn without corresponding sales on ethanol was to roll the dice on the whole venture........it backfired but the truth is the dice should never have been rolled in the first place. There have been rumours in the industry for some time that this was a company narrowly focused on getting big and not one that properly addressed its commodity price risk. Their profits through the boom in 2006 were far from extraordinary. I guess the good news for farmers is that at least now that they are built it is likely that these plants will continue to operate.....just with a different name on the door.