CHICAGO (Reuters) - Valero Energy Corp (VLO.N) temporarily shut down its ethanol plant in Albion, Nebraska, on Tuesday due to poor profit margins at the facility, a company spokesman said.
The plant, which can produce 110 million gallons (500 million liters) of the biofuel annually, was expected to restart operations before the autumn corn harvest, while none of the company’s other 10 ethanol facilities were likely to idle, spokesman Bill Day said.
“We started this morning with an organized shutdown because of poor margins in the ethanol industry,” Day said. “Corn prices have gone up and ethanol margins have gone down. Corn basis levels are high.”
U.S. corn supplies are forecast to shrink to a 16-year low by the end of the summer, according to the U.S. Agriculture Department.
Chicago Board of Trade corn futures for July delivery climbed to the highest level in about a month on Tuesday, rising 1.6 percent to $6.09 per bushel, as hot and dry weather stressed the developing crop.
Basis bids -- the amount above or below benchmark CBOT futures prices that dealers bid to buy corn from farmers -- are trading at or near record levels due to the tight grain stocks. <GRA/M>
The high futures and basis have squeezed profits at ethanol plants, with the average margin in Nebraska at a negative 22 cents per gallon, lowest since early May.
Nedak Ethanol LLC last week said it would temporarily shutter its 44-million-gallon-per-year ethanol plant in Atkinson, Nebraska.
Reporting by Michael Hirtzer; Editing by David Gregorio and Marguerita Choy