Chicago Argo and US Gulf Coast Ethanol Markets Fell to Their Lowest Levels

Chicago Argo and US Gulf Coast ethanol markets Wednesday fell to their lowest levels since late September on a combination of a well-supplied market and another drop in corn futures, sources said.

Chicago Argo ethanol was assessed down 2.125 cents, or 0.9%, from Tuesday to $2.3135/gallon, while the US Gulf Coast ethanol assessment slipped 2.75 cents to $2.3650/gal.

Specifically, Chicago Argo and US Gulf Coast ethanol assessments were on a five-session slide to their lowest levels since September 27, when they were at $2.2295/gal and $2.3270/gal, respectively.

The premium of US Gulf Coast ethanol to the Chicago Argo ethanol market edged down 62 points to 5.15 cents/gal, the lowest premium since September 17, when it was at 4.2 cents/gal. Sources attributed the drop in the premium to increasing length in the US Gulf Coast ethanol market.

US Gulf Coast stocks for the reporting week ended Friday increased for the fourth week in a row as they jumped 497,000 barrels to 3.276 million barrels, the highest level since June 1, when they were at 3.729 million barrels, the EIA said Wednesday in its latest weekly report.

Regarding overall length in the US ethanol market, an ethanol broker said that "we keep building" ethanol inventories in the US.

Total weekly US ethanol stocks in the reporting week that ended Friday soared 687,000 barrels, or 3.6%, to 20.028 million barrels, the highest level in more than six months, the EIA said Wednesday in its most recent weekly report.

Lower corn futures also had a role in weaker ethanol markets, sources said.

December corn futures settled down 3.25 cents/bushel to $7.21/bushel on lower wheat futures, which competes with corn as use for animal feed, and persistent concerns regarding weak corn export demand, analysts said.

The US Department of Agriculture's latest weekly export report, released Thursday, showed a decline of 184,529 mt, or 78.1%, in current marketing year corn net export sales to an eight-week low of 51,611 mt for the reporting week ended November 29.