SOURCE: Paragon Financial Limited

Paragon Financial Limited

November 02, 2012 08:20 ET

New Enzyme Allows Ethanol Producers to Make 2.5% More Ethanol From Corn

The Paragon Report Provides Stock Research on BioFuel Energy and Renewable Energy Group

NEW YORK, NY--(Marketwire - Nov 2, 2012) -  Ethanol stocks have struggled in recent months as surging corn prices have resulted in negative profit margins for producers. The worst drought in over 50 years in the Midwest has seen prices for corn surge 25 percent according to the World Bank. The Paragon Report examines investing opportunities in the Specialty Chemicals Industry and provides equity research on BioFuel Energy Corp. (NASDAQ: BIOF) and Renewable Energy Group Inc. (NASDAQ: REGI).

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According to data compiled from Bloomberg companies are currently losing approximately $0.33 on every gallon of ethanol produced, based on December contracts. Beginning in late September major producers such as Valero Energy, Abengoa SA, and Biofuel Energy have idled output as a result of poor profit margins. Help may be on the way for ethanol producers as Novozymes, a Danish industrial enzymes maker, recently launched an enzyme they say produces more ethanol from less corn.

Novozymes Avantec enzyme "can squeeze an extra 2.5 percent of ethanol out of the corn," the company said. According to Novozymes executive vice president, Peder Holk Nielsen, "If all ethanol plants in the US started using Avantec, they would save 3 million tonnes of corn."

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BioFuel Energy currently has two ethanol plants in the Midwestern Corn Belt. BioFuel Energy enjoys a strong commercial relationship with Cargill Inc., one of the world's leading agricultural corporations. Cargill is a service provider, specifically in corn procurement, risk management and product sales. BioFuel Energy is scheduled to release their third quarter results on November 14, 2012.

Renewable Energy Group is a leading North American biodiesel producer with a nationwide distribution and logistics system. The company recently acquired a 15 million gallon per year biorefinery from North Texas Bio Energy for $300,000 in cash and 900,000 shares of common stock.

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