Whether it’s locking in a profitable margin or protecting an input cost, Powerline can provide clear and concise commercial risk management solutions for ethanol producers and marketers.
Following a period of record growth, ethanol producers face a particularly daunting job when it comes to commodity price risk management. Within commodity markets traded around the world, the energy complex has historically proven to be one of the most volatile. Within the energy complex, ethanol producers and marketers are faced with:
1) An input in natural gas that is recognized to often have the single highest price volatility of any traded commodity (energy or otherwise), and 2) an output in ethanol that offers only limited market term and transparency.
Additionally, basis risk an be substantial. Throw in price variability for corn and DDG’s, and the job of balancing a budget versus debt, equity and investor returns can be a formidable task.
Let Powerline help.
Financially-settled ethanol, corn and natural gas hedging tools are designed to fit alongside your current efforts in the cash marketplace, and will not interfere with current marketing or off-take agreements.
OTC swaps and options for ethanol can expand the market depth and time scale for locking in future margins. Forward looking OTC strategies may allow you to move well beyond the fixed price or gas-plus offerings in the wet barrel market.
Natural gas hedging tools can be used to enhance existing physical contract positions or provide upside price coverage on a standalone basis. Additionally, Conway or Mt. Belvieu Natural Gasoline Swaps can allow for more control over your costs, and provide a forward price curve for a more transparent market.
Want to learn more? Give us a call today!