Valero Offers Former Supplies Corn Contracts

According to Dow Jones, farmers who had contracts to supply corn to ethanol company VeraSun are being offered a deal by Valero Energy Corp., who purchased the bankrupt company. Bill Day, a spokesman for San Antonio-based Valero says suppliers have been offered spot price for the corn plus 40% of any premium above the spot price specified in their previous contracts with VeraSun.

"Most suppliers have accepted it," Day said. However, Day couldn't specify what percentage of the suppliers had agreed to the new terms. Valero agreed to purchase seven ethanol facilities and have closed the deal on six of them. At the moment they are operating four of the plants with plans to ramp up production at the other facilities. The plants can produce 780 million gallons of ethanol a year, which requires approximately 281 million bushels of corn.