Ethanol stocks are getting downgraded by various stock analysts. They’re have a hard year and plenty of investors don’t see how they can pull out of it. Grain prices, especially corn, have risen dramatically in the past year. They’ll keep going up, too, in the aftermath of the recent flooding in the Midwest. Not only have numerous food crops been wiped out, the Mississippi is still too high for barge traffic, preventing farmers from getting necessary supplies, as well as shipping crops.

Corn ethanol seems unlikely to recover from these issues. Ethanol plants are already closing down. VeraSun Energy has delayed planned construction at two of their plants, and Heartland Ethanol has not only cancelled plans to build seven corn ethanol plants — they’re dissolving as a company.

Some of the problems with the corn ethanol industry can be laid at the feet of the nationwide credit crunch: everyone is tightening their belts. And with the cost of food crops rising, it becomes harder to find corn crops for ethanol production. Any other ethanol based on food crops is bound to have similar trouble in the next year or so. If you’re still pinning your hopes on ethanol, consider looking at other sources — algae, jatropha, etc.

Photo — Snake Eyes