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Fontanelle, IA | Maybe the “trend” has changed with huge corporations and commodity risk management teams taking over the hedging for ethanol plants...
In the past, I would bet that most corn is “hedged” in the cash market vs. the CME. Then, ethanol was spot cash sold either daily or weekly due to the ill-liquid nature of ethanol contracts. Hence, back-to-back hedging of input and output to lock in the processing margin FOB plant. Price of ethanol is usually inverted.... worth more today than a month from now.... usually....
VeraSun taught the industry a lesson about cowboying the procurement side with the board. | |
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Ethanol going forward
