Managing Margin, Risk, Financial Transparency in the Ethanol Industry

When it comes to margin and risk management, ethanol producers have difficult and unique choices.

In most commodity processing industries, the output price is highly correlated to input price. For instance, in the energy sector there is a strong price relationship in the crack—the spread between crude oil and gasoline or diesel; in the metals sector there is a strong price relationship in the conversion—the spread between iron ore and steel; in the food sector there is a strong price relationship in the crush—the spread between soybeans and soymeal or oil.

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