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VeraSun, ADM Shares Soar after Democrats take House - 11/9/06

Shares of VersSun Energy and Archer Daniels Midland Co. the United States largest producers of ethanol soared on speculation of Democratic control of the House of Representatives will increase demand for ethanol.

ADM rose 5.8 percent to 35.46 on the New York Stock Exchange. VeraSun rose 8.1 percent to 20.23.

Mark McMinimy with the Stanford Group said the political climate for ethanol in Congress will move from favorable to promising over the coming two years. After being out of power for 12 years the Democrats picked up 27 House seats insuring control of the House after January. Collin Peterson will take over the House Agriculture Committee and has promised to be aggressive in seeking ethanol subsidies.

ADM produces 1.1 billion gallons of ethanol a year and plans to increase capacity by 50% by 2008 taking advantage of fuel demand made mostly from corn. ADM’s profit from ethanol production increase by four times in the quarter ending in Sept 2006 to 177.6 million.

Following changes in fuel rules in an energy bill passed by Congress last year U.S. refiners this year switched to ethanol as a blending component in gasoline. This new Energy Bill requires refiners to double ethanol use to 7.5 billion gallons a year by 2012.

Summarized Source
Daniel J. Goldstein and Bruce Blythe
Bloomberg.net

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