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Green Plains buys locally sourced corn for its Midwest plants and makes ethanol used in gasoline blends. Ethanol supplies most of its revenue. Under an exclusive agreement, Eco-Energy buys the plants’ fuel-grade ethanol and handles its marketing and certain logistics duties, making it the key partner connecting Green Plains to fuel buyers.
The same production process yields distillers grains and Ultra-High Protein for animal feed, plus renewable corn oil sold mainly to renewable diesel and biodiesel plants. Green Plains Trade markets these co-products. A smaller agribusiness and energy services operation also earns revenue from handling and storing grain and trading commodities.
Profitability depends on the gap between product selling prices and the cost of corn and natural gas used in production. Green Plains generally cannot pass higher corn costs on to buyers, and it may reduce or suspend production when margins are unfavorable. Fuel-blending rules also shape ethanol demand. Nearly all its ethanol is sold with renewable-fuel compliance credits, known as RINs; losing eligibility to generate them could force it to export ethanol, buy replacement credits or sell at a discount.
The risk section is the longest, dullest part of the filing. This keeps only what can really hurt you: where it hits, how hard, when it plays out.
Every company claims an edge. Each one is checked against hard numbers like margins and returns: which hold, and which line gives way first.
Green Plains’ results hinge on corn-to-ethanol margins and low-carbon incentives, with privately held POET a key ethanol rival and Eco-Energy the exclusive buyer and marketer of its fuel ethanol.
REX American Resources earns income from stakes in ethanol producers that compete with Green Plains in the U.S., exposing both to corn-to-ethanol margins. Watch earnings from those ethanol investments for a read on the economics of selling ethanol made from corn.
Alto Ingredients competes with Green Plains for fuel-ethanol sales, and both also sell feed left over from production. Its renewable-fuel production results offer a closer comparison for Green Plains than its specialty-alcohol business, particularly when ethanol selling prices change relative to production costs.
The Andersons overlaps with Green Plains in both ethanol and grain handling: each produces and trades ethanol and co-products, and buys, stores and sells grain. Watch its Renewables results for ethanol economics and its Agribusiness results for conditions in grain trading and handling.
Archer Daniels Midland competes with Green Plains for fuel and animal-feed buyers, turning farm crops into ethanol and feed ingredients. Watch its soybean-meal sales alongside ethanol: soybean meal competes with Green Plains’ dried distillers grains and Ultra-High Protein, and an oversupplied U.S. protein market has compressed their values.
Valero Energy’s ethanol plants compete with Green Plains in sales of ethanol and co-products, but petroleum refining dominates Valero’s broader business. Watch its Ethanol segment rather than company-wide results for a clearer view of the production and selling conditions Green Plains faces.
Aemetis competes with Green Plains through its California Keyes plant, which sells ethanol, distillers grains and corn oil. Watch that plant’s ethanol and co-product sales, rather than Aemetis’ Indian biodiesel business, for evidence of demand in the product markets they share.
Gevo’s North Dakota ethanol operation competes with Green Plains to sell low-carbon ethanol and related corn-derived co-products.
Darling Ingredients competes with Green Plains for renewable-fuel feedstock and animal-feed buyers, selling animal fats, used cooking oil and protein meals against Green Plains’ corn oil and feed co-products. Watch its Feed Ingredients sales for demand for these competing oils and proteins, rather than for ethanol demand.
EIA Crude Oil Stocks Change (Oct/16)
Green Plains sells ethanol that competes with gasoline, so US crude oil and gasoline stock levels can shift fuel prices and blending economics and affect what the company earns from ethanol sales.
Rising stocks suggest looser crude and fuel supply, which can weigh on gasoline prices and the economics of ethanol competing with it, potentially lowering Green Plains’ ethanol selling prices; falling stocks suggest tighter supply and may support them.
Fed Interest Rate Decision
Green Plains’ interest expense depends partly on market rates, so the Fed’s rate decisions can change what it pays to borrow and what it keeps as earnings.
Expected4.0%Last release4.0%
If it comes in above expectations
Higher rates can raise the cost of Green Plains’ rate-sensitive borrowing and squeeze earnings; lower rates can ease those costs.
If it comes in below expectations
Lower rates can ease the cost of Green Plains’ rate-sensitive borrowing and support earnings; higher rates can raise those costs.
DARLING INGREDIENTS INC. earningsDAR
Darling Ingredients' Feed Ingredients sales show how buyers are taking animal-feed ingredients and renewable-fuel feedstocks that compete with Green Plains' corn oil and feed co-products.
Watch Darling Ingredients' Feed Ingredients sales for how buyers are taking its competing oils and protein products. Stronger sales suggest buyers are absorbing those products, which may leave less selling pressure on Green Plains' corn oil and feed co-products. Weaker sales may point to softer demand or more competing supply, making it harder for Green Plains to find buyers and preserve product value.
Archer Daniels Midland Company earningsADM
ADM's soybean-meal sales show conditions in the animal-feed market, where soybean meal competes for buyers with Green Plains' dried distillers grains and Ultra-High Protein.
Read ADM's soybean-meal sales alongside its ethanol results. Stronger meal sales suggest buyers are taking more of this plant-protein feed, which could ease competition for Green Plains' dried distillers grains and Ultra-High Protein. Weaker sales, if they reflect oversupply or soft demand for protein feeds, point to more pressure on Green Plains to hold prices and find buyers for those products.
Green Plains, Inc. earningsThis company
Green Plains turns corn into ethanol and feed co-products, and this report shows whether sales of those products cover the cost of making them.
Read ethanol output and co-product sales alongside gross margin in Ethanol Production. Gross margin is what remains after direct production costs are subtracted from sales: rising output with stronger margin says ethanol and co-product prices are covering corn, natural gas, and other costs better. Rising output with thinner margin says costs are outrunning prices; falling output and margin point to weaker production economics and less reason to keep plants running.
Alto Ingredients, Inc. earningsALTO
Alto Ingredients' renewable-fuel production results show how ethanol selling prices compare with production costs in the market where Green Plains sells ethanol and feed co-products.
Look at Alto's renewable-fuel production results for whether sales are holding up against production costs. Stronger results suggest ethanol prices are covering inputs such as corn and natural gas more comfortably, a better market setting for Green Plains' ethanol business; weaker results point to a narrower price-cost spread and less room for Green Plains to earn a production margin.
