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VeraSun Energy shuts 3 distilleries
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VeraSun Energy Corp., the second-largest U.S. ethanol producer, has idled three distilleries as demand falls and prices fail to cover the cost of production.
The company shut output at plants in Bloomingburg, Ohio, Albion, Neb., and Linden, Ind., said VeraSun spokesman Mike Lockrem on Friday in a telephone interview. Each of the distilleries can produce 110 million gallons annually.
Producers have been struggling to make profits amid fluctuations in corn prices. Pacific Ethanol Inc. Friday said it will suspend output at its plant in Madera, Calif. On Jan. 7, Aventine Renewable Holdings Inc. said it halted construction of its refinery in Aurora, Neb., for as long as 180 days.
"There are very difficult operating conditions out there," said Joseph Gomes Jr., an analyst at Oppenheimer & Co. Inc. in New York. "If you're buying corn solely in the spot market, you're probably break-even at best."
Corn rose 58 percent from January to July last year, squeezing ethanol producers, before falling to 13 percent below year-ago levels Friday.
VeraSun filed for bankruptcy protection in October, blaming the swings in corn prices. Poet LLC, in Sioux Falls, S.D., is the largest ethanol producer by capacity.
Lockrem said there's no estimate on when plants would resume operations.
Production may become profitable again later this year as more plants cut output, Gomes said.
"The question for the publicly traded guys is who can last that long," he said. "It's a very difficult market."
Shares in Pacific Ethanol have declined 92 percent in the past year. Last month, AltraBiofuels Inc., which counts venture capitalist Vinod Khosla among its investors, shut production at its plants in Cloverdale, Ind., and Coshocton, Ohio.
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