The estimated weekly production margin for a typical US Midwest dry-mill ethanol plant jumped 1.98 cents, or 3.39%, this week to a 15-week high of 60.43 cents/gal, according to a Platts estimate based on a Friday review of data.
This was also the second-highest estimated weekly ethanol production margin this year, only bested by the margin May 10, when it was 62.24 cents/gal.
The stronger estimated weekly ethanol production margin occurred as the proportional increase in the ethanol price was greater than that of the corn cost.
The weekly average estimated delivered feedstock corn cost was on a three-week incline, jumping 26.89 cents, or 4.52%, to a four-week high of $6.2182/bushel on tight near-term supplies, analysts said.
The weekly average estimated dried distillers grain byproduct price increased for the first time in five weeks as it climbed 80 cents to $221.63/st on lower ethanol production, sources said, which tightened the supply of dried distillers grains in the marketplace.
US ethanol production fell 13,000 b/d to a three-week low of 844,000 b/d in the reporting week ended August 16, Energy Information Administration data showed Wednesday.
The estimated denaturant cost climbed 5.79 cents to a 17-week high of $2.1694/gal as "RVP shifts come into sight and diluent demand starts to increase as [the] weather turns colder in Canada," a source said. The estimated denaturant cost was at its highest level since April 26, when it was at $2.2040/gal.
The estimated natural gas cost was stable at $3.59/MMBtu.
The denaturant cost was based on the weekly average of the Platts natural gasoline assessment at the Conway, Kansas, hub, while the gas cost was based on the August Platts Chicago ANR 7 pipeline monthly index.
The estimated ethanol price used in calculating the margin was the weekly average of the Platts Chicago Argo ethanol assessment, which rose 11.79 cents, or 5.13%, to a five-week high of $2.4166/gal on a combination of tight supply, improving demand and stronger corn futures, sources said.
September corn futures on the Chicago Board of Trade settled Tuesday at $4.9550/bushel, up 21.75 cents from the previous week, on forecasts for hot and dry weather in the Midwest, the largest corn-producing region in the US by volume, sources said.
The estimated production margin for a typical dry-mill ethanol plant was calculated by weighing data from Platts and government agencies, including average delivered corn cost, dried distiller grain prices, natural gas prices, certain blending costs and ethanol prices.
Fixed-cost calculations were based on a 50 million gal/year-capacity Midwestern plant with 32 employees working at an average salary of $47,300/year.
