DOW JONES NEWSWIRES
Archer Daniels Midland Co. (ADM) would not be hurt by an end to
U.S. ethanol subsidies so long as the government takes steps to
increase access to a gasoline blend containing 15% ethanol, the
company's vice chairman said Tuesday.
ADM, like most in the industry, expects the government to
ultimately cut a 45-cent tax break to companies for each gallon of
ethanol they blend. But because ADM is taking the "raw material,"
or corn, and selling the ethanol to refiners, its margins should
remain intact, Vice Chairman John Rice told investors at a
conference in Paris.
If the blender's credit is removed, "maybe the price of the raw
material should come down," Rice said. ADM is one of the world's
largest ethanol producers.
Still, while he said the credit is likely to be cut within the
next two or three years, "it just sends the wrong message" to cut
the credit in the middle of the year, Rice said, as U.S. Sen. Tom
Coburn, (R., Okla.) has proposed.
Any negative impact from ending the subsidy would be blunted by
a move to expand access to gasoline containing 15% ethanol, or
E-15, Rice said. While the government has approved E-15, its usage
has been restricted as there are few gasoline pumps that provide
it.
Rice also told investors that the corn processor and grain
merchandiser is "very well positioned" on corn for the next few
months. Futures at the Chicago Board of Trade indicate that the
price of corn, currently near all-time highs, is likely to be
cheaper in the months ahead.
As a result, "we need to run our inventories a lot lower than we
historically do," Rice said.
Shares of the Decatur, Ill., company were inactive at $29.80
premarket. They are down 0.9% year to date.
-By Ian Berry, Dow Jones Newswires; 312-750-4072;
ian.berry@dowjones.com