The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, fell 0.66 percent to 62.94 on large cap declines.  For the day, Archer Daniels Midland (ADM) lost 2.35 percent to $29.89, while BP dropped 1.41 percent to $52.43. Among smaller caps, Cosan (CZZ) gained 0.98 percent to $8.23. Overall, declines and advances were even for the day.

Biofuels Digest Index falls 0.66 percent to 62.94 on large cap declines is a post from: Biofuels Digest

In Brazil, Royal Dutch Shell announced an MOU with Cosan (CZZ) to make the largest investment in the history of biofuels, with an agreement to establish a 50-50 Brazilian ethanol joint venture with Cosan which will own 4,500 retail stations, sugar, ethanol, fuel distribution and power generation, and  the Shell aviation fuel distribution business.

The companies said that they plan to increase the venture’s ethanol production levels from 529 Mgy to 1323 Mgy, which would make the venture one of the top three ethanol producers in the world, after Archer Daniels Midland and POET in the US. Shell downstream chief Mark Williams told Reuters that the company would

Under the terms of the proposed agreement, Cosan will merge its entire business into the as-yet unnamed JV, while Shell will contribute its retail, aviation distribution, and will invest up to $1.63 billion in capital into the venture. Overall, Cosan assets are valued at $4.93 billion, including its 60 million tones in sugar cane crushing capacity, and Shell’s retail and aviation marketing units are valued at $3 billion.

As announced, the enterprise will become the third-largest fuel distributor in Brazil, and will have combined annual sales of $21 billion, and an asset value of $9.56 billion.  Cosan previously acquired ExxonMobil’s retail marketing unit, which operated 1500 stations, in 2008, for $1 billion, and acquired 83 Petrosul stations in December for $40 million.

The deal continues a trend of major agricultural and oil refining companies moving into Brazilian ethanol. Last month, Bunge announced that it would acquire sugar and ethanol producer Moema for $452 million, while in October Louis Dreyfus acquired 423 Mgy in annual ethanol capacity with the acquisition of Santelisa Vale, and has $4.6 billion in assets in its LDC-SEV Brazilian ethanol entity. Dreyfus, which injected $463 million into the venture, said it expected to have an IPO between 2012 and 2014.

Last October, BP said that it will commence production of cellulosic ethanol from biomass in Brazil in 2013. BP has a cellulosic ethanol joint venture, Vercipia, with Verenium, and, according to Valor Online that “the first plant for producing second generation ethanol will be constructed in the United States in 2010, with the technology being transferred to BP’s plants in Brazil after operations commence at the U.S. facility.”

In April 2008, BP invested $560 million for a 50 percent stake in Tropical Bioenergia, a joint venture with Santelisa Vale and Maeda Group that is building 370 Mgy in sugar cane ethanol capacity in Goias state.

Brazil, which produces 7 billion gallons of ethanol per year, has 15 million ethanol-based or flex-fuel cars.

More on the story from CNN.

Shell, Cosan announce $21 billion Brazilian ethanol JV: largest biofuels deal ever is a post from: Biofuels Digest

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, dropped 0.44 percent to 68.10 on large cap retreats. For the day, Archer Daniels Midland (ADM) fell 1.05 percent to $31.23, while Cosan (CZZ) dipped 3.46 percent to close at $8.92 on fears of an ethanol mandate reduction. Among smaller caps, Verenium (VRNM) gained 4.29 percent to $5.10. Overall, declines led advances 3 to 1 for the day.

Biofuels Digest Index drops 0.44 percent to 68.10 on large cap retreats is a post from: Biofuels Digest

The Biofuels Digest Index, which includes a selection of 25 advanced and first-generation pure-play biofuels companies, as well as oil and grain companies with significant biofuels investments and operations, outperformed the Dow Jones Industrials, and tracked within 2 percent of the S&P 500, while gaining more than 17 percent during 2009.

It has become a commonplace to deride first-generation biofuels as a bad investment, and advanced biofuels as “always five years away”, particularly in terms of publicly traded biofuels stocks. However, perception and reality have significantly diverged in this case.

Perception

“Corn based ethanol is dead and a very bad investment,” goes one online comment.  Business Week last April opined “Investing in biofuels, as in most cutting-edge tech, can be treacherous.” while Robert Bryce wrote last year that “About 9 percent of all the ethanol plants in the US have now filed for bankruptcy and some analysts believe the numbers could go as high as 20 percent. Even if the 20 percent figure is never reached, it’s readily apparent that  billions of investment dollars will be lost on the corn ethanol scam.”

Reality

Although many biofuels investors chose unwise investments, investors who focused on a balanced portfolio of public biofuels stocks wouldn’t have done badly at all.

For the year, the Biofuels Digest Index portfolio of stocks gained 17.48 percent to a 1/2/09 close of 66.28 – and is up more than 2.7 percent for 2010 to date, as well. By contrast, the S&P 500 was up 19.67 percent for the corresponding period and the DJI was up 15.43 percent. Daily closing values for the S&P 500 and the Biofuels Digest Index can be downloaded here, plus the BDI portfolio and weightings.

BDI stocks for 2009 were: Archer-Daniels-Midland (ADM), The Andersons (ANDE), Aventine Renewable Energy (AVR), Bluefire Ethanol (BFRE.OB), Biofuel Energy (BIOF), British Petroleum (BP), Cosan (CZZ), Environmental Power (EPG), GreenShift (GERS.OB), Green Plains Renewable Energy (GPRE), GreenHunter (GRH), Gushan Environmental Energy (GU), Lignol (LEC.V), Momentum Biofuels (MMBF.OB), OriginOil (OOIL.OB), PetroAlgae (PALG.OB), Pure Biofuels (PBOF.OB), Pacific Ethanol (PEIX), Raven Biofuels (RVBF.OB), Sustainable Power (SSTP.PK), SunOpta (STKL), Syntec Biofuel (SYBF.OB), Texcom (TEXC.PK), Valero (VLO) and Verenium (VRNM).

The Index is weighted to reflect both company size and the importance within the sector.

Thanks to Digest subscriber Sylvain Chevalier for suggesting this article. Note: The Digest and its editors do not own any renewable energy stocks.

Biofuels Digest Index outperforms Dow Jones Industrials in 2009 is a post from: Biofuels Digest

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, gained 0.48 percent to 66.98, a 40-day high, on ethanol rises.  For the day, Archer Daniels Midland (ADM) gained 0.19 percent to $31.63, while Cosan (CZZ) jumped 6.26 percent to $8.49  Among smaller caps, Pacific Ethanol (PEIX) gained 14.49 percent to $0.79. Overall, advances led declines by 8 to 7 for the day.

Biofuels Digest Index gains 0.48 percent to 40-day high of 66.98 on ethanol advance is a post from: Biofuels Digest