REX AMERICAN RESOURCES Corp (NYSE: REX)

REX American Resources Corporation, trading under the symbol REX, is a significant player in the ethanol industry. Established in 1984, the company's primary business activities revolve around the production and sale of ethanol, a renewable fuel derived from corn and other biomass. The ethanol industry is highly dependent on commodity prices, including corn, ethanol, distillers grains, distillers corn oil, and natural gas, as well as the availability of corn.

REX generates revenue mainly through the sale of ethanol, distillers grains, and distillers corn oil. Its primary customers are refiners, blenders, and other ethanol producers. The company's ethanol operations are heavily reliant on the crush spread, which is the difference between the price of ethanol and the price of corn. Managing this crush spread effectively is crucial to REX's profitability.

The company operates two consolidated ethanol plants, One Earth Energy, LLC, and NuGen Energy, LLC, with a combined capacity of approximately 716 million gallons of ethanol per year. These plants are located in Gibson City, Illinois, and Marion, South Dakota, respectively. REX's ethanol production employs the dry milling method, which involves grinding corn into a fine powder and then fermenting it to produce ethanol.

In addition to ethanol, REX also produces distillers grains, a by-product of the ethanol production process used as animal feed. The company's distillers grains are marketed as a high-protein feed ingredient for livestock, and their price is influenced by the prices of competing animal feed products. REX's distillers grains are sold to a variety of customers, including feed mills, livestock producers, and export markets.

Another by-product of the ethanol production process is distillers corn oil, which is used as a feedstock for the production of renewable diesel, biodiesel, and sustainable aviation fuel. REX's distillers corn oil is marketed as a low-carbon feedstock for these markets, which may see increased demand due to extended blending tax credits, credits included in the Inflation Reduction Act, and growing Low Carbon Fuel Standard (LCFS) markets.

REX's competitive advantages include its experienced management team, its ability to manage the crush spread, and its access to a large and diverse customer base. The company's competitive position is further strengthened by its ability to adapt to changing market conditions and its focus on sustainability and environmental stewardship.

REX is one of the largest ethanol producers in the United States, with a combined capacity of approximately 716 million gallons of ethanol per year. The company is a leading player in the Midwestern ethanol market, where it has a strong presence and a reputation for quality and reliability. REX's customers include refiners, blenders, and other ethanol producers, with Marathon Petroleum Corporation being its largest customer. REX also supplies ethanol to other major companies, including Valero Energy Corporation, Chevron Corporation, and ExxonMobil Corporation.