January 18th, 2007
Yesterday, Credit Suisse analysts said that with corn futures prices passing $4 a bushel, ethanol plant expansion might be limited in years to come.
Plants that are under construction this year into the first half of next year will likely be completed, but beyond that, companies will be careful to proceed with expansion plans and cancellations are possible. David Nelson, a research analyst at Credit Suisse, said the stocks-to-use ratio for corn is at its second lowest level in the last 50 years.
Normally the stocks-to-use ratio for corn ranges between 10% and 20%, but it was lowered by the USDA to 6.4%. The last time the usage ratio was this low was in 1996, when CBOT corn futures traded at more than $5 a bushel.
