U.S. Ethanol Maker Eyes Low-Carbon Sugar as Its ‘Moonshot’

Source: By Kim Chipman, Bloomberg • Posted: Sunday, November 7, 2021

Shares of Green Plains Inc. rebounded to a seven-week high after the U.S. ethanol maker touted progress in its attempt to transform into a powerhouse of high-value ingredients made from corn.

At the top of the list is so-called clean sugar technology, which involves making dextrose and glucose used to produce an array of products, including in the growing renewable chemicals industry. Chief Executive Officer Todd Becker says the push could be the company’s “moonshot.”

“The margins are much bigger, generally over the long term, in dextrose then they ever will be in ethanol,” Becker said in a phone interview. “We believe that’s one of the biggest opportunities that we have as a company.”

The CEO has been working to sharply reduce Green Plains’ reliance on ethanol, with an aim of fully remaking the company into a low-carbon manufacturer of clean sugar and high-protein ingredients for use in products ranging from pet food to candy, with biofuel merely a byproduct.

Non-food grade corn oil, which can be used to make renewable diesel, as well as capturing and storing ethanol-related carbon emissions are also key areas of future growth, according to Becker’s plan.

Shares of Green Plains rose 2.5% to $39.85 in New York trading. They revived after earlier touching a six-week low following the release of third-quarter earnings. The stock has tripled this year.

The company on Thursday posted a bigger loss than forecast as a surge in the cash corn market led ethanol crush margins down 93% to $1.1 million, or 1 cent per gallon, in the July-September period. That pressure has since eased with a new bumper crop replenishing supply and easing near-record local prices.

“Results weren’t stellar, but the corn basis issues that weighed on earnings are in the rear-view mirror,” said Stephens Inc. analyst Ben Bienvenu, who has an “overweight” rating on the stock and is reviewing his price target. Fourth quarter looks “very strong.”

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