US ethanol financing tightens

By Caroline Humer

NEW YORK, March 21 (Reuters) - Financing for ethanol plants has tightened as rising corn prices have made it tougher for producers to turn a profit and an industry shake-out could follow, according to sector bankers and executives.

The price of corn, the main ingredient of U.S. ethanol, has risen to $4 per bushel, making it more difficult for ethanol plants to turn a profit. At the same time, oil prices have fallen since peaking at more than $78 a barrel last summer, cutting into demand for a lower priced alternative.

Both the debt and equity sides have gotten tighter, bankers say.