Biodiesel and Ethanol Investing

Arkansas media NWAnews.com reports that farmers should take advantage of current rock-bottom prices on diesel fuel and fertilizer now by locking in contracts for the 2009 season. With the recent Chapter 11 bankruptcy filings by Pilgrim’s Pride, a chicken producer based in Pittsburg, Texas, and VeraSun Energy, an ethanol producer based in Sioux Falls, S. D as examples, poor hedging decisions prove costly. This “lock-in now” advice should help producers forecast better with more profitable results. Most of this year’s huge swings in agricultural commodity prices were the result of a cash influx from index funds. Futures purchases by one particular fund, the Goldman Sachs Commodity Index, have been largely responsible for driving agricultural-commodity prices up, and then down, in almost lock step with crude-oil prices. By reducing costs, farmers can produce feedstock to be sold profitably, helping the ethanol industry as well. The incoming Energy Commission under President-elect Obama will also impact the farming industry.