The ethanol industry hangs on the ‘ethanol crush spread,’ which is a sexy way of referring to the gross production margin for the business. The margin is computed as the difference between the combined sales value of ethanol plus distiller’s grain by-products and the cost of corn. The difference is the stuff of much speculation in the ethanol industry and provides the profits, if there are to be any, in an ethanol operation.
A dime is impressive, but Green Plains management has an entirely different lever in their grip that might deliver more than dimes. They have chosen to not only look for new markets, but to diversify their product line entirely by integrating forward into a beef production. The day before the earnings announcement the company disclosed it has agreed to acquire two cattle-feed operations from Bartlett Cattle Company for $16.0 million.