What is up with ethanol

Discussion in 'Stocks' started by thehangingman, Jan 1, 2007.

  1. These ethanol stocks are proving themselves to be a nightmare for investors, but great for traders. PEIX made a nice little roundtrip in the last year from the teens to the 40s then back to the teens. Bill Gates said he was getting into PEIX back in the spring. I can only wonder if thats still the case now. Probably sold the shares to the guys in the 30s-40s range.

    What do you think? I think VSE will be good when it double bottoms in the mid-teens and PEIX will be good in the low teens. You simply cant beat VSE's run from the mid teens to the twenties and look, now back to the teens in 30 days time.

    On a side note, I wonder if Gates current homebuilder play will pan out like it did with the ethanol stocks.
  2. dood.

    you never mentioned crude

    ethanol is an ALTERNATIVE energy

    ethanol STOCKS (to some extent) are leveraged to the price and utility of ethanol VS. conventional energy

    if you are trading ethanol stocks and you are not paying attention to corn futures prices and oil prices, you are not addressing the underlying issues that EXPLAIN the hyoooge drop in many ethanol stocks.

    here's a hint: if oil goes up to $80 a barrel, what do you think ethanol stocks will do?

    rinse, lather, repeat
  3. I believe oil will go higher from here. I have no experience with corn futures so I cant make an accurate prediction.

    I would like to make a good swing play in VSE and/or PEIX. Most likely VSE as it appears to be fundamentally better and more ripe to go higher then PEIX. The question now is at what price.

    In analyzing the chart of both stocks, I see two areas where the stock might double bottom. That area for VSE is either the 17s or the 15s.

  4. you don't have to have experience with corn futures, to WATCH the price of corn. extremely expensive corn makes ethanol more expensive. corn has had an EXPLOSIVE bull market recently. it's frigging amazing . it is very expensive.

    but yes, if oil goes back to $80 a barrel, then alternative energy becomes that much more viable

    because the higher the cost of fuel, the more cost effective it is to substitute part of it with corn (ethanol)

    note that brazil et al make their ethanol from cane, not corn.

    note also that the CW (and the CW is not necessarily right, but it pays to note it) is that the new dem congress will be more likely to fund alternative energy and./or give alt energy tax etc. incentives.

    this is also something to consider
  5. My predictions for crude is for it to trade in the 55-65 range for 2007 so I will be looking to swing trade the range in the ethanol stocks.
  6. im not making any predictions about crude, but i am long a significant amount in my IRA.

    basically, i look at it this way

    good news is pretty much priced in for crude. also, the (relatively) mild east coast weather has helped too

    but give us some mideast strife , some unexpected bad news, etc. and crude will frigging explode

    i see little downside risk iow. i also like that it can do well if stocks don't

    on a technical basis, it is right above the trendline on a multiyear weekly chart
  7. Corn ethanol is dependent on government subsidies not oil price. The assumption is that if oil is high and higher, Bush will throw more subisidies at ethanol & corn grown for ethanol. Also, corn grown for ethanol is lower grade and is not exactly reflected in the corn commoditiy futures.

    Without getting into a long discussion, corn ethanol is basically fraud and was confirmed when ADM made it clear that they had little plans to expand ethanol production even with the huge government funds thrown at them. Since the general opinion seems to be that Democrats will take presidential office in 2008, chances are the ethanol kickbacks will be dwindled down or completely discontinued.
  8. Ethanol is a JOKE! Creates far more environmental issues than oil when using corn. So all the cheering tree-huggers need to rethink how supportive they are about it. Only one solution, price majuer.
  9. get a clue blunt. bush can't throw any subsidies at anything

    hint: who makes economic policy?

    the LEGISLATIVE branch.

    bush can veto bills.

    but it is congress that sets spending and that writes bills

  10. All the above posts have a grain of truth to them. Fact is, tax credits to refiners and mandates to use ethanol for blending will keep demand in tact for a few more years.

    Corn is on a bull run. There is no wiggle room in stockpiles for the next year, every kernal is spoken for and with weak dollar, exports will continue to expand. It is a safe bet to take a position with the funds on pullbacks. Same with beans and wheat. Drought, floods next summer and the chicken feed is getting expensive. Remeber 88 and 93, we are due for another farm belt calamity.

    My advice, plant a few rows in the backyard and set up a hen house. Corn and any end user's costs are going up next year. Buy a side of beef and stock the freezer.
    #10     Jan 1, 2007