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Crush margin tracker: US ethanol crush margin rises on week

Fort Worth (Platts)--28 Aug 2017 424 pm EDT/2024 GMT


The US ethanol crush margin rose to 35 cents/gal Monday, an increase of 3.69 cents/gal from 31.31 cents/gal on August 21, the date of the last published Platts Crush Margin Tracker.

The margin was stable for most of the week as the benchmark Argo market slid with feedstock corn futures.

Argo found support from a strong barge loading program taking product out of the Illinois terminal for shipment south. Sources said the terminal may be only 65% full, boosting prices at the front of the curve.

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Weekly US Energy Information Administration data last week was mixed, but slightly bullish. Production did not fall as much as market participants expected, but stock levels decreased in line with expectations.

Output slid 7,000 b/d to 1.052 million b/d in the week that ended August 18. As gasoline demand is at its peak in the summer, ethanol production typically runs at maximum rates. Milder weather in the Midwest and affordable corn also prompted plants to increase output.

Inventories fell 319,000 barrels to 21.509 million barrels. The West Coast saw a mild build, but not nearly the size of a week earlier, when the EIA reported imports for only the third time this year. The Gulf and East coasts led the decline in stocks.

Argo was assessed at $1.55/gal Monday, down 95 points from $1.5595/gal on August 21.

The front-month CBOT corn futures contract had fallen 13 cents to $3.36/bushel Monday from $3.49/bu on August 21.

Ongoing rain in the Midwest continued to pressure corn prices as the precipitation could improve yields.

The Farm Journal's crop tour, which wrapped up on Friday, showed yields slightly lower than the US Department of Agriculture's expectations. While that would normally prove bullish for prices, the weather in the Corn Belt continued to drive the market lower.

A simple crush margin can be calculated by dividing the cost of corn per bushel by 2.8, the number of gallons of ethanol that a bushel of corn can produce. The resulting number is the cost of corn per gallon of ethanol.
MondayAugust 21ChangeY-O-Y Change
Crush35 cents/gal31.31 cents/gal+3.69 cents/gal+2.15 cents/gal
Argo$1.55/gal$1.5595/gal-0.95 cent/gal+9.7 cents/gal
Corn$3.36/bu$3.49/bu-13 cents/bu+32 cents/bu



--Josh Pedrick, joshua.pedrick@spglobal.com

--Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com



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