Sept 24 (Reuters) - Ethanol producer Biofuel Energy Corp said it has decided to idle its Fairmont, Minnesota, facility due to weakening margins as corn prices continue to soar.
“Commodity margins have continued to weaken as the impact of the drought in the Corn Belt continues and ethanol remains in surplus,” said Chief Executive Scott Pearce.
Drought has ravaged this year’s U.S. corn crop, which is used in food products, livestock feed as well as to produce ethanol, pushing up the prices of the commodity.
The Buffalo Lake Energy plant, which is capable of producing 115 million gallons of ethanol per year, is located on a major Union Pacific rail line and with direct access to an existing Cargill grain elevator.
The company’s only other plant in Wood River, Nebraska, is currently operational and has a similar capacity as Buffalo Lake.
Earlier this month, hedge fund manager David Einhorn said he raised his stake in Biofuel Energy to 36.2 percent.
Valero Energy Corp and the operators of a Kansas ethanol plant have announced plans to idle production at their plants, citing scarce supplies of corn and high corn prices due to prolonged drought.
Denver-based Biofuel Energy’s shares, which have almost doubled since Einhorn’s increased stake, closed at $5.95 on Monday on the Nasdaq.