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Shares of Archer Daniels Midland (NYSE: ADM) are in freefall, as the prospects for corn based ethanol dim in the current environment.
Chart Courtesy of StockCharts.com
A governor's convention was the site of the most recent debate on corn based ethanol, the major reason that shares of Archer Daniels Midland soared from 2004 to 2006 before entering a long consolidation pattern, and finally starting their descent.
The debate centers around whether corn should be used for food or fuel. And at least on the talking end of the deal, the food side seems to be winning, as the debate has grown and at least conceptual support has grown for a move away from corn to other sources of feedstock for the fuel.
The U.S. Department of Energy is reportedly not too enthused about the direction of the discussion, and neither are the companies that are building 77 new ethanol producing plants being built in the U.S., which presumably would use corn as feedstock.
Still, ADM has been the bellwether for corn based ethanol. And its shares are plunging, just on the talk, which means that the battle might be more than half over, especially as the new president takes office, whoever that might be.
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