Pacific Ethanol looking for better second half:
PAC ETHANOL INC (PEIX): Free Stock Analysis
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Pacific Ethanol (
reported its second quarter revenue on August 14, 2012. Due to a
decline in ethanol prices as compared to last year, revenue was
below year ago levels despite a significant increase in total
gallons sold. Internal production was flat and third party sourced
ethanol increased by 27%. We had expected an increase in gallons
and flat pricing so results were below our expectations.
As a result of the minimal (or negative) spread between corn and
ethanol prices the company is reducing the production of ethanol
and, depending on market conditions and availability, will increase
the third party sales. The conversion of the ethanol plants to
separate the corn oil proceeds as expected and the first plant will
be selling corn oil in the first quarter of 2013 and all the
operating plants will have been converted by year-end 2013.
Pacific Ethanol expects the second half of 2012 to be better than
the first half. We think that ethanol prices will increase as a
shortage develops in the fall.
Corn supply in the west, the major supply area for the company, has
not been as severely affected by the drought as has the mid west.
However the price of corn is still at record levels.
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