Named after the Greek Goddess of Agriculture, Ceres is a self-styled energy crop producer. Ceres has developed proprietary seeds for sweet sorghum and switchgrass to be used as feedstock for ethanol production. Ceres seeds are genetically modified to produce crops that require less water and fertilizer and are tolerant of higher salt levels in soil. Higher yields and consistent availability lead to improved economics for large-scale ethanol production.
With the U.S. corn crop severely reduced by drought this year, ethanol producers may look at sorghum with greater interest. Sorghum fields are still in relatively good condition this year, demonstrating the plant’s hardiness. The problem is that farmers do not find sorghum an attractive crop. Unlike corn, which has many uses, there are few buyers for sorghum. Thus promoting sorghum in the U.S. probably means a collaboration like that in Brazil with a crop sponsored by an ethanol producer.
Even if investors have lost confidence in Ceres to make sorghum a favored ethanol feedstock, the Company has plenty of capital to keep trying. At the end of May 2012, Ceres had $67.7 million in cash on its balance sheet, just a bit more than the $65.2 million it raised in its 2012 IPO. In the last twelve months Ceres used $25 million of its cash to support operations and continued development work on new seeds. Even if the company makes no attempt to curtail spending, I estimate Ceres has a big enough nest egg to keep trying to another two years.