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VeraSun Shows No Impact Yet on Basis

November 21, 2008
By: Sara Schafer, Farm Journal Media Business and Crops Editor

Sara Muri, Top Producer Business & Crops Online Editor
Even with VeraSun Energy Corporation filing for bankruptcy earlier this week, there has been little impact on basis, according to research by Cash Grain Bids.
Ethanol giant VeraSun filed for voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The firm said in a release that the move was needed to "enhance liquidity while they reorganize."
Kevin McNew, president of Cash Grain Bids, says their firm has looked at corn basis around some of the Verasun plants in light of their recent financial woes. McNews says they wanted to see if VeraSun has started to back off on bidding for corn. "The short answer is, no,” he says.
McNew says they looked at corn basis for over 2,000 grain buyers now versus what they were paying for corn this time last year. "The late harvest and other factors have led to changes in basis between last year and this year,” he says. "So to compare how Versaun plants are doing, we looked at their ‘basis change' versus what their nearby competitors change was (in a 30-mile area). "
Of the six plants Cash Grain Bids looked at, four of the plants are actually stronger relative to their nearby competition while only two plants were lagging their competition. "So, it seems like it is business as usual for them in the corn market,” McNew says.
Here's the data Cash Grain Bids collected:


Plant Location    Plant Basis Change Competitor's Basis Change
Albert City, Iowa +15 +15
Charles City, Iowa     +3 -3
Ft Dodge, Iowa +9 +13
Ord, Neb. +10 +3
Central City, Neb.   +20 +5
Aurora, Neb. +5 no change
VeraSun announced that during the chapter 11 proceedings, they plan to resume normal operations. 

Photo: Jeanne Bernick


You can e-mail Sara Muri at smuri@farmjournal.com.

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