US ethanol hopeful disbands amid record corn price

NEW YORK, June 18 (Reuters) - Private U.S. company Heartland Ethanol LLC has scrapped plans to build seven alternative fuel plants, the first of which had been expected to open in November, and is dissolving the company as flooding in the Midwest has driven corn prices to record levels.

"We're dissolving the company as soon as possible," Heartland President Walker Filbert said in an interview, adding that the company would disband sometime this summer.

The company had gathered tens of millions of dollars from investor groups for the ethanol plants, which were all expected to open in Illinois and produce 55 million gallons per year each.

The first Heartland plant had been expected to open in Griggsville, Illinois, and the rest of the plants had been expected to open on a staggered basis about six to eight months after the other, Filbert said. The company had gotten permitting on a couple of the plants.

The Griggsville plant had closed a bank loan on October 31 and had built a water line to the site.

"Credit banking markets for ethanol started getting squirrelly last August," Filbert said. He said the investor groups in the company had wanted to wait 18 months for markets to improve.

But severe inflation in oil and commodities markets, including prices for corn, the main U.S. feedstock for ethanol, made the investors scrap the plants and dissolve the company, Filbert said.

Corn prices have hit record prices over $8 per bushel after the worst Midwest flooding in 15 years.

U.S. ethanol capacity has grown about 40 percent over the last year to 8.8 billion gpy amid generous government incentives and mandates. The U.S. Renewable Fuels Standard mandates the blending of 9 billion gallons of biofuels into gasoline this year, 11 billion gallons next year and nearly 13 billion gallons in 2011.