BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR COOKIE NOTICE
X


Argo ethanol reaches four-month high on growing demand

Houston (Platts)--16 Feb 2018 559 pm EST/2259 GMT


The benchmark Argo ethanol market Friday rose to its highest level since October as robust demand and a bullish US Energy Information Administration report supported prices.

"Production is coming down, stocks have drawn, energy got very firm and gas demand was up," said one source. "It's a perfect storm I suppose. Exports are going OK and people think they may continue, but there are doubters."

S&P Global Platts assessed Argo at $1.4780/gal Friday, up from $1.4775/gal Thursday and the highest level since October 2, when it was $1.4875/gal.

Robust export demand has bolstered values in the market as product seems tight despite relatively high stocks.

The US exported 656.3 million liters (173.3 million gallons) of ethanol in December, 77% higher than a year ago and up 61.7% month on month, according to recent US Department of Agriculture data. It was the highest monthly export total on record.

Sources have said that exports in January were also strong with continuing demand into February.

Production rates have hovered above 1 million b/d for all but one week since early October, according to EIA data.

But the higher production has not translated into lower prices the past two weeks as market participants search for product to stage for export and product to meet domestic commitments.

A weekly EIA report Wednesday was also bullish for the market but saw little reaction as many market participants did not return to the office until Thursday, after an industry event.

The data showed production fell 41,000 b/d in the week ended February 9 and stocks dipped 604,000 barrels.

The stock figure put total inventories only 385,000 barrels above last year's level, the smallest year-on-year increase since last September. The tightening stocks and increasing domestic demand with a climbing refiner and blender net ethanol input are likely to continue supporting the market.

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

--Edited by Derek Sands, derek.sands@spglobal.com




Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.