Makers of ethanol, an alternative fuel derived from corn, witnessed a third-quarter retreat from the strong industry conditions that characterized the second quarter: peak oil and ethanol prices, and rapid demand growth for ethanol as a gasoline additive.

Still, analysts note that ethanol prices and margins held at historical highs during the quarter despite the sequential decline and poor performance among the equities.

Ethanol producers suffered a rough third quarter in the stock market: Ethanol stocks have slid 41 percent after ethanol spot market prices plummeted 55 percent, according to a report by Friedman Billings Ramsey analyst Jacques Rousseau.

Shares of Pacific Ethanol Inc. and Verasun Energy Corp. shed 39 percent during the third quarter. Shares of Archer Daniels Midland Co. lost 8 percent, while Andersons Inc. shares fell 18 percent from July through the end of September.

Prices of the alternative fuel and gasoline additive peaked during the summer, as crude oil prices soared to an intraday high of $78.40 a barrel. As oil prices retreated, so did ethanol. Rousseau suggests ethanol prices were also "artificially high" due to refiners' rapid transition from using a chemical known as MTBE to ethanol, a gasoline additive for cleaner emissions.

When ethanol prices spiked, imports flowed in, which in turn brought ethanol prices lower through the third quarter.

Ethanol producer Hawkeye Holdings Inc. decided in September to postpone an initial public offering, citing unfavorable market conditions in a filing with the Securities and Exchange Commission, along with "the recent pullback in the energy segment in particular."

Stifel Nicolaus analyst George I. Askew noted in a report that the volatility of spot ethanol and corn prices during September and the first half of October has pressured ethanol profit margins.

"Specifically, higher corn input prices and lower ethanol output selling prices compresses ethanol profit margins, all else being equal," he said.

Ethanol averaged $2.62 a gallon in the third quarter, according to Raymond James analyst Pavel Molchanov, and corn averaged $2.52 a bushel.

The industry saw a sequentially slimmer "crush spread," or the difference between the price of a gallon of ethanol and the price of the amount of corn required to produce a gallon of ethanol, according to Molchanov. A bushel of corn produces about 2.8 gallons of ethanol using dry mill technology. Still, the spread remained at a historically high level.

Archer Daniels Midland is scheduled to report quarterly earnings on Oct. 31. Verasun Energy is expected to report on Nov. 7, and Andersons is slated to post quarterly results Nov. 11. Pacific Ethanol is expected to report results by Nov 15.