The estimated production margin for a typical US Midwest dry-mill ethanol plant for the week ended Friday dropped 13.58 cents, or 12.47%, to a seven-week low of $0.9535/gallon, a review of US Department of Agriculture and Platts data showed.
The weaker margin was a greater proportional decrease in the ethanol price than the corn cost, as well as both a lower dried distillers grain byproduct price and a higher natural gas cost.
The weekly average estimated delivered feedstock corn cost fell 9.02 cents, or 2.1%, to a five-week low of $4.2339/bushel on reduced demand, especially in the export sector, analysts said.
US total weekly corn net export sales for the reporting week ended December 26 plunged 1.813 million mt, or 91.2%, to a 10-week low of 174,865 mt, according to the Department of Agriculture's latest weekly export report, which was released Friday.
The weekly average estimated dried distillers grain byproduct also dropped, plummeting $16.86/st to $200.10/st, the lowest level since February 3, 2012, when it was at $195.74/st.
Analysts attributed the lower dried distillers grain byproduct price also to poor export demand as there was market talk that China rejected dried distillers grain exports from the US due to unauthorized genetically modified strains.
The estimated denaturant cost sank 9.08 cents to $2.1342/gal, while the estimated monthly natural gas cost rose for the third month in a row, climbing 83 cents to $4.76/MMBtu, the highest level since August 2010, when it was at $4.91/MMBtu.
The higher estimated natural gas cost was on a flurry of storms across the Midwest, sources said, which increased heating demand for natural gas.
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 January 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 shed 8.75 cents, or 4.11%, to a seven-week low of $2.1313/gal on relatively weak buying interest during the end-of-year holidays, 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.
