Friday, February 29, 2008

Ethanol Bust

The ethanol bust
The ethanol boom is running out of gas as corn prices spike.
By Jon Birger

NEW YORK (Fortune) — Cargill announces it’s scrapping plans for a $200 million ethanol plant near Topeka, Kan. A judge approves the bankruptcy sale of an unfinished ethanol plant in Canton, Ill.. And that was just Tuesday.

Indeed, plans for as many as 50 new ethanol plants have been shelved in recent months, as Wall Street pulls back from the sector, says Paul Ho, a Credit Suisse investment banker specializing in alternative energy. Financing for new ethanol plants, Ho says, “has been shut down.”

How can the ethanol industry be slumping only two months after Congress passed an energy bill most experts consider a biofuels boon? The answer is runaway corn prices.

Spurred by an ethanol plant construction binge, corn prices have gone stratospheric, soaring from below $2 a bushel in 2006 to over $5.25 a bushel today. As a result, it’s become difficult for ethanol plants to make a healthy profit, even with oil at $100 a barrel.

Just look at Verasun (VSE). In the third quarter of 2007, Verasun’s gross profit margin shrank from 37% to 12%, as its corn costs rose from $2.05 a bushel to $3.32 a bushel. And, remember, corn prices today are 60% higher than they were back then (whereas wholesale ethanol prices are up only 30%.)

The margin crunch now afflicting ethanol producers is something I predicted when I first wrote about the “Dot-Corn” boom in Fortune last March (see “The Great Corn Gold Rush” ). Here’s an excerpt:

[In the summer of 2006] when corn was $2 a bushel and oil was $70 a barrel, ethanol plants were minting money. They averaged $1.06 in profit for every gallon of ethanol sold, according to Credit Suisse. Today, with oil at $60 and corn at $4, ethanol producers typically net an average of only 3 cents…

If corn spikes to $5 — a real possibility, says A.G. Edwards commodities analyst Dan Vaught — or oil declines to $50, ethanol’s once-fantastic margins would turn negative. That possibility is creating tensions between ethanol producers and corn growers, two groups whose lobbyists are normally attached at the hip.

Looming over all this is a huge catch-22: $4 corn is a result of the 31 new ethanol plants built since 2005, but investors won’t keep bankrolling new plants if $4 corn keeps eating up their profits.

The shakeout was inevitable. That said, the ethanol business isn’t going away, at least so long as the federal government continues to mandate the use of biofuels — 36 billion gallons a year by 2022, up from 7 billion last year-and impose hefty tariffs on imported ethanol. There is an oversupply of ethanol right now, but the yearly increase in the biofuels mandate means that demand will eventually catch up with supply.

What probably has changed permanently are ethanol economics. The days of cheap corn are over, and the industry’s new, lower profit margins clearly favor ethanol leader Archer Daniels Midland (ADM, Fortune 500) over all the smaller producers like Verasun, privately-held Poet Energy and the many, many farmer-owned ethanol cooperatives. ADM’s massive 200 million-gallon-a-year ethanol plants simply have better economies of scale than their 50-million-gallon-a-year rivals. And the fact some of ADM’s big plants run on coal instead of natural gas makes ADM’s cost advantage that much greater.

Of course, I’m not saying anything that Wall Street doesn’t already understand. Since the new energy bill was signed by President Bush on Dec. 19, Verasun and Pacific Ethanol (PEIX) are each down 38%.

And ADM? It’s up 10%.



http://factsaboutethanol.org/

Wednesday, February 27, 2008

Kettle Falls Hotel


"A JEWEL IN THE FOREST"

In the center of Voyageurs National Park ~ America's motorboat wilderness
Kettle Falls Hotel and Kettle Falls are a remote spot on the Minnesota-Canadian border that has a rich history spanning several hundred years. Native American Indians fished for sturgeon at the falls since the early 1700's. French Voyageurs portaged their 26 foot canoes and packs of fur around the falls. Gold miners took steamers from here to Rainy Lake's gold fields in the 1800's.
Loggers brought millions of logs through the dam in the early part of the century. During the 1920s, commercial fishermen auctioned off their catches in 100-pound boxes at the docks.
During prohibition, bootleggers distilled and sold whiskey near the Hotel and surrounding areas.
The Kettle Falls Hotel was constructed in 1910 by timber baron, Ed Rose but was reputedly financed by Madame Nellie Bly. The William's family, beginning with Bob and 'Lil in 1918, operated the hotel for 70 years.
Recognized for its significant contribution to regional history, the hotel was placed on the National Register of Historic Places in 1976.

The boundary between the U.S. and Canada runs through the middle of the Kettle Falls Dam. This unique geographic phenomenon allows a visitor to stand on United States soil and look "south" into Canada. The overlook near the Dam is a great place to do this so bring your camera.

Voyageurs National Park was established in 1975 "to preserve for the inspiration and enjoyment of present and future generations, the outstanding scenery, geological conditions and waterways system which constituted a part of the historic route of the Voyageurs who contributed significantly to the opening of the Northwestern United States.” The park was named for the French-Canadian canoe men, the voyageurs who paddled large birch bark canoes carrying trade goods and furs between the Canadian northwest and Montreal. But this landscape was also home to people that sought to make their living off the land here through logging, mining, commercial fishing, and recreation.
Kettle Falls Hotel is open from May thru mid October.

Tuesday, February 26, 2008

Missouri Crappie's

If you're getting antsy to get the boat in the water, head down to Missouri. I've fished Truman Lake in the spring and it has some huge Crappie. Nice landing at Bucksaw Resort operated by the Corps of Engineers, so it's a public landing. Here the latest fishing report from there.


Brought to you by Bucksaw Resort
and Marvin Deckard Guide Service
Date Feb 25, 2008 Water Temp Low 30's early to mid 30's later
Lake Level 709.3 Discharge Varies daily Water Clarity Lightly stained



Crappie fishing is good. Had a trip out Sun the 24th and had 3 limits before noon.the crappie were on the bluffs in 25 ft of water and more. All fish were caught between 18ft to 23ft. Some of the better trees are under water so your fish locator will play a factor.We used blk/char,blu/white and red and white they all worked.

Black Bass no report,but we are seeing a lot of dying shad, its time for the jerk bait.

Catfish no report
White bass no report.

We will be opening on March the 1st
so come and have breakfast or lunch and go catch some crappie.




Date Feb 20, 2008 Water Temp Low 30's early to mid 30's later
Lake Level 709.2 Discharge Varies daily Water Clarity Lightly stained



Crappie are being caught on the bluffs. Fish the outer trees along the bluffs. Look for water that is 25 ft deep and deeper and fish 20 to 25 ft deep. Fishing that deep you need to use a 1/8oz jig head or two 1/16oz heads about a ft apart. The last time I was out we caught them on blk/yellow in the 2 inch tube. The water is lightly stained and very fishable. The best bite is from the U hwy bridge to the dam area.
Back Bass no report, remember March is a great month for spinnerbaits so get ready.
Catfish no report
White bass no report.

Bucksaw resort will open on March 1st come down and see us.The restaurant will be open come and eat. Thanks Bucksaw

Monday, February 25, 2008

Walleye Tips

Walleyes have a reputation for being short strikers. They'll hit the bait without getting hooked. But walleyes aren't tentative eaters. Usually, the walleye makes a sincere attempt to eat the bait. The fisherman just didn't allow the fish to succeed.

Avoiding this problem-and consequently hooking more fish-is a two-step process. Step one is to understand how a walleye eats. Sometimes a walleye will slash a bait like a pike or a muskie does. But usually they'll swim up to it and flare their gills, inhaling their prey and the water surrounding it. If anything happens to interrupt that flow of water, you get a short strike, or nothing at all.

Step two is adapting your presentation to decrease resistance in the lure-and-line combination, and thereby permit your bait to flow right into the walleye's mouth. To that end, he offers the following six tips:

1: Use Light Line Light (4- and 6-pound-test), thin-diameter lines offer less drag, or resistance, on a lure. This lets a walleye suck it in more easily.

2: Bounce the Bait When you're using live bait use a bottom-bouncer rig. Bouncers are L-shaped wires that have a lead weight molded to the shaft. As an angler retrieves the rig, the weight bounces off the bottom and creates slack in the line, which allows the fish to inhale the bait more easily.

3: Shorten the Stroke Many jig fishermen pump their rods too vigorously, using long vertical strokes that can pull the bait out of a fish's mouth. Use short lifts instead and you'll hook more walleyes.

4: Offer a Bigger Bite Adding a plastic body to a jig also helps by increasing the surface area to which the fish's sucking force is applied.

5: Pump a Crank With crankbaits, steady retrieves may hook aggressive walleyes, but a stop-and-go technique is better for deliberate feeders. Once the lure achieves proper depth, lift the rod tip, reel in the slack, and repeat.

6: Troll With the Flow When the water has a chop, trolling with the waves imparts that necessary slight slack in the line. Also, keep a close eye on your inside planer board as you make a turn; it will give you that small amount of slack that allows for more solid strikes-and more walleyes in the boat.

Sunday, February 24, 2008

Fishing

A couple go on vacation to a fishing resort in northern Minnesota. The husband likes to fish at the crack of dawn. The wife likes to read.

One morning the husband returns after several hours of fishing and takes a nap. Although not familiar with the lake, the wife decides to take the boat out. She motors out a short distance, anchors, and continues to read her book.

Along comes a forest policeman in his boat. He pulls up alongside the woman and says, "Good morning Ma'am. What are you doing?"

"Reading a book," she replies, (thinking "Isn't that obvious?")

"You're in a restricted fishing area," he informs her.

"I'm sorry officer, but I'm not fishing, I'm reading."

"Yes, but you have all the equipment. I'll have to take you in and write you up."

"If you do that, I'll have to charge you with sexual assault," says the woman.

"But I haven't even touched you," says the policeman.

"That's true," replied the woman, "But you have all the equipment."


Babe Winkleman?
No one in this town could catch any fish except this one man. The game warden asked him how he did it so the man told the game warden that he would take him fishing the next day ...

Once they got to the middle of the lake the man took out a stick of dynamite, lit it, and threw it in the water. After the explosion fish started floating to the top of the water. The man took out a net and started picking up the fish.

The game warden told him that this was illegal.

The man took out another stick of dynamite and lit it. He then handed it to the game warden and said "Are you going to fish or talk?"