July 2016 - Chippewa Valley Ethanol Company

Chippewa Valley
Ethanol Company
270 20th St. NW • Benson, MN 56215 • 320-843-4813
Website: http://www.cvec.com • E-Mail: cvec@willmarnet.com
Volume 23, No. 1
July, 2016
CVEC C E LE BRAT E S "20 Y E ARS " IN
O P E RATI ON ON F RIDA Y , J UNE 10 TH
Congratulations on 20 years! Included in this newsletter is an insert with some pictures highlighting the special
day, please take a look and see if you recognize anyone.
Whether you were able to make it to the celebration or you
were merely with us in spirit, one of the recurring themes of
the anniversary celebration was recognition of the people,
the employees, the board of directors, the shareholders and
the community that have built something to be proud of.
In rural Minnesota, we may not truly get the feel for how
and 50% have failed by year 4. The facts are only about 3 in
10 businesses survive past 10 years so be very proud of this
years. 160 million dollars returned to the investor. 1170%
return on original investment. All accomplished by a rural
area that was able to come together and invest in a different path forward, congratulations on your accomplishment.
The path forward still remains and the direction of the
company along that path is guided by its mission statement:
CVAC is focused on generating distributions to our members
by engaging in opportunities to increase the value of agriculture production.
Fuel ethanol production
has been a pillar throughout
CVEC’s timeline,
but continues
to be clouded in
mystery. The EPA
has currently put
forth a suggestion
of 14.8 billion gallons of ethanol
use for 2017. Just
200 million gallons short of the
original goal of
15 billion and one
needs to wonder
why in a market
capable of pro-
ducing well over 15 billion gallons.
Why keep the training wheels
on? Exports remain an important
piece of keeping a strong ethanol
network in place as we continue
By Chad Friese,
as a nation to import energy from
General Manager
other nations and send them back
a cleaner fuel than we take in. The path may continue to
be shrouded in the years ahead, but continuing discussions
of Carbon Intensity, Greenhouse gas emissions, and fuel
corn to ethanol with regard to yield of ethanol per bushel of
corn currently about 2.85 gal/Bu. Our recent projects have
we used approximately 35,000 BTU of energy to produce a
gallon of ethanol, today that number is just over 27,000 BTU
per gallon. The new boiler project and condensers that were
brought online have had a lot to do with our latest reductions
to this energy usage level. This year’s major capital projects
focus on additional production of industrial alcohol for Glacial
Grains Spirits and
the construction
of a new more
tower system.
The Glacial Grain
Spirits expansion
is a new column
to allow CVEC to
double the capacity of industrial
production from
current levels,
and the cooling
tower expansion
will allow for that
growth while also
replacing a nearly
2 decades old sysCont'd on Page 2
CVEC Celebrates 20 Years!
tem with a state of the art efficient system that gives us
additional capacity for the future.
The CVAC Board, and CVEC management spend a lot
of time trying to shine a light on the path ahead and get
a peek at what lies around the next curve or over the
next hill. This is done in a measured approach, to avoid
pitfalls in the case where the light may not shine brightly
enough to get a clear picture of the path. Transportation
costs, new technologies, Carbon Intensity, worker availability, GHG, energy usage and availability, supply and
demand, imports and exports
all act to conceal or shroud
the path and contribute to
the mystery. Politics and
governmental regulation tend
to hinder your step and make
you more unstable and limit
your nimbleness when you do
get a better glimpse ahead.
CVEC’s continuing efforts going forward hopefully give us
the success that few achieve
and put us on a path that gets
us another 20 years down the
Brody Padgett
Commodities Manager
bpadgett@cvec.com
This year’s corn crop went in
very well in our area, and across
most of the nation with only a few
early problems with wet weather in
the Eastern Corn Belt and parts of
Minnesota. The national corn crop condition ratings have
held steady to begin the year at 75% good to excellent,
which is better than last year at this time. Overall the
nation’s crop is off to a good start and we’ve managed
to avoid any large prevent-plant issues as well. The fast
start, along with large planted acres and timely rains for
the heart of the Corn Belt, has pressured the market the
past couple of weeks. USDA’s June 30th planted acreage
report concluded that the country actually planted 94.148
million acres of corn, which is slightly more than half a
million acres higher than the March 31st planting intentions
estimate. By comparison, last year the nation planted 88
million acres of corn. The large acreage number, along
with timely rains this weekend across a crop that was
planted early and is off to a fast start has resulted in
over a dollar drop in the December corn futures since the
mid-June highs.
Cont'd from Page 1
path. Here’s to another 20 years. Let the journey begin.
Congratuations to the following employees who have
been with CVEC for the past 20 years: Denise Bakken (20+),
John Kent (20), Scott Tostenson (20), Mark Schwarz (20),
& Keven Wilts (20).
Please mark your calendar for September 7th. CVEC
will have our information meeting on that date to kickoff
at 9:00 am at McKinney’s in Benson, MN. This will represent our next opportunity to measure our success along the
path and see what we can do to shine the light out ahead.
Corn Crop Review
Revisiting the highs will be nearly impossible this year
without a significant weather problem, but demand levels
are high and the beginning of a problem will create some
concern, especially on the soybean balance sheet, so be
prepared to capitalize on any rallies in the futures market.
If weather cooperates and the US realizes a trend-line
yield as the USDA is projecting, we’ll most likely be looking at a carryout north of 2 billion bushels and prices will
be pressured further as we reach October. Basis levels
should be supported however. With strong demand for
exports, ethanol, and feed there is and will continue to
be good demand for corn, and with the recent weakness
in the board, basis levels will need to improve to meet
needs if the futures market isn’t going to do the work.
A reminder that if you are considering moving bushels
from the Benson Corn Pool and into the delivery position
I would be happy to discuss your individual economics
around the recent changes to freight payments. The
Area Avg +4 Plus Freight Premium is an excellent way to
diversify pricing and help manage market risk while also
collecting a freight premium for delivery. I look forward
to seeing everyone at the September 7th informational
meeting at McKinney’s in Benson. As always, please feel
free to call with any questions and visit our website at
cvec.com for facility announcements and cash corn bids.
David Thompson
CVAC Chairman
Our thanks to all who
attended CVEC’s 20th anniversary
celebration on June 10th. Although
the weather was a bit warm we
served a grilled pork loin dinner to
nearly 500 people.
We had a good program starting
out with Lynn Ketelsen from the Linder Farm Network
doing his noon radio show LIVE from our tent at the
Benson airport. It was great to have Lynn share 20
years of CVEC’s success with his vast radio audience as
he interviewed CVEC and industry leaders.
A highlight of our program was having former
managers Bill Lee and Mike Jerke reflect on their years
at CVEC and hear the members show their appreciation
for the leadership they provided.
Two of the most prominent leaders in the ethanol
industry on the national scene, Bob Dineen, President
of the RFA (Renewable Fuels Association) and Brian
Jennings, Executive Vice-President of ACE (American
Coalition for Ethanol) shared their insight and optimism
for the future of ethanol.
The day ended with a large number of members
going on a plant tour to see the inside workings of our
ethanol plant. A sincere “thank you” to our CVEC staff
for their organized planning and work to make the event
go smoothly!
Financially it’s been a challenging year in the
ethanol industry with very modest profits the first 6
months. April and May have each shown net income over
a million dollars bringing our net income for the first 8
months to just under $3.2 million dollars.
We are optimistic that the recent trend will continue
and we can end our year September 30th on a high note.
We look forward to seeing you at our member
information meeting, scheduled for September 7, 2016,
at McKinney’s in Benson, to review 2016 and take a look
at the year ahead.
Have a safe and enjoyable summer!
David Thompson
Chairman
at
Member Informational
Meeting
September 7, 2016
at 9:00 AM
McKinney's on Southside,
Benson, MN
Shareholder News:
3rd TRIMESTER PRICE ANNOUNCED. The price for 3rd trimester
of FY 2016 will be $2.90/bushel plus freight and equalization.
The price adjustment on 2nd trimester bushels was
$.28/bushel and mailed out to shareholders who deliver their
bushels on June 4th.
DELIVERY NOTICES STARTED WITH THE LETTER “U” FOR 3RD
TRIMESTER. Delivery notices will begin with the letter “U”
for the period beginning June 1, 2016. CVAC will be calling in
30% of corn deliveries for 3rd trimester of 2016. Open delivery
will continue in place and any shareholders who own 50,000
bushels or more will continue to have two weeks in which to
deliver your corn.
The CVAC board of directors has declared a patronage
dividend of $.10/bushel on May 27th. The payment was sent
out to shareholders on June 3rd. For any shareholders that
have not received your payment please contact the CVEC office
@320-843-4813. For shareholders that have requested direct
deposit please check your accounts before calling the office.
The enrollment letter for Benson Corn Pool for FY
2017 was mailed to all shareholders on June 24th. The deadline
for sign up for 2017 is August 1st.
DIRECT DEPOSIT. Direct Deposit is now available for all
shareholders and CVEC corn deliveries. If you are interested
in direct deposit please give us a call and the forms can be
sent to you.
CHIPPEWA VALLEY AGRAFUELS
SHARES FOR SALE
LOT#
SHARES
PRICE
504
20,000 $5.00
506
9,900
$5.50
512
3,159(pool)
$4.25
CHIPPEWA VALLEY AGRAFUELS
SHARES SOLD
SHARES
1,000 6,101 9,900 12,600 21,000
1,100 5,000
5,000 8,250 1,500 13,500 2,880 5,000
5,000 5,761 8,000
SOLD
$4.50 $5.50 $5.15 $5.25 $5.00 $5.00 $5.50
$5.25 $5.60 $5.25 $5.25 $5.00 $4.40 $4.50 $5.25 $4.25 DATE SOLD
1/15
2/15
3/15
4/15
5/15
7/15
10/15
11/15
1/16
1/16
1/16
2/16
6/16
6/16
6/16
6/16
Morgan Staton
My name is Morgan Staton. I’m
from Benson, MN and I am currently
attending the North Dakota State
College of Science for Electrical
Technology.
I am currently interning this
summer at CVEC and it has been a
great experience. I am looking forward to working at
CVEC throughout the summer and I will continue my
college education in the fall.
New Employee:
Logan Cardwell
My name is Logen Cardwell, I
am from Clinton, MN and graduated
from Clinton Graceville Beardsley
High School in 2010
I currently live in Kerkhoven, MN
with my 3 kids and fiancé.
My hobbies are driving truck and
riding 4-wheeler.
I am looking forward to working at CVEC in the
operations division.
New Employee:
John Vigil
My Name is John Vigil. I was born
and raised in Willmar, MN. I have 4
brothers.
Shortly after high school I moved
to Arizona where I worked for an
airline.
I moved back to MN where I spent
most of my adult life. I have worked at FED EX at the
MSP airport and was a wedding DJ on the weekend.
I have 2 children, my daughter Alex is 12 and my son
Nick is 11.
In my free time I enjoy fishing, golfing and being
outdoors. I am currently refinishing an old 5th wheel
camper.
I am happy for the opportunity to be at CVEC.
270 20th St. NW
Benson, MN 56215
New Employee:
CVEC Celebrates "20 Years"
Chad Friese, GM
Dave Thompson, Chairman
Mike Jerke, Former GM
Bob Dinneen – President &
CEO of the RFA
Brian Jennings – Exec VP – ACE
Bill Lee – Former GM