Ethanol Producers in The US Saw Margins Sink Further Into Negative Territory in October

Ethanol producers in the US, the world's largest maker of the biofuel, saw margins sink further into negative territory in October as selling prices fell around 4% from September, according to a study by Iowa State University.

Distillers of the biofuel lost an average of $0.12/gal last month, the most since June and $0.09/gal more than in September.

According to the university's model, US ethanol production margins have been negative since January, with the exception of April, when manufacturers broke even.

Ethanol prices slid to $2.30/gal in October from from $2.40/gal in September, ISU said, as the US market remained awash with excess supply.

Feedstock corn costs declined to $7.51/bushel ($2.68/gal) from $7.63/bushel, while revenue from DDG sales fell to $271/mt ($0.82/gal) from $280/mt, according to ISU. DDG, or dried distillers grains, is a byproduct from ethanol used to create livestock feed.

The university's study uses ethanol, corn and DDG prices as reported by the US Department of Agriculture in the state of Iowa. The model represents estimated margins for an average 100,000 gal/year plant built after 2007.

US ethanol stocks grew 1.076 million barrels, or 6%, to a three-week high of 17.851 million barrels in the reporting week ended Friday 16, based on data from the US Energy Information Administration.

Meanwhile, weekly ethanol production shrank 13,000 b/d to a four-week low of 811,000 b/d, the EIA said.