The US ethanol crush margin tumbled to 24.63 cents/gal Monday, a decrease of 7.57 cents/gal from 32.20 cents/gal on April 24, the date of the last published Platts Crush Margin Tracker.
The benchmark Argo ethanol assessment weakened over the past week as back-to-back weeks of stock builds pressured prices.
Argo slid nearly every day over the past week as many market participants who had previously been bullish on expectations of stocks falling revised expectations lower.
Weekly US Energy Information Administration data showed turnarounds continuing to trim output, but demand proved insufficient to keep stocks from building.
April 26 EIA data showed production fell 6,000 b/d to 987,000 b/d in the week ended April 21. Ongoing maintenance is likely to keep output relatively low for the coming weeks, based on historical trends.
Though production remained sharply lower than the record highs seen earlier in the year, capacity expansions at plants mean output is much higher compared with last year. Production was up 60,000 b/d year on year in the week ended April 21.
Inventories climbed 235,000 barrels to 23.269 million barrels. The build was focused on the East Coast, with every other region seeing lower stocks week on week.
Many market participants had expected stocks to draw consistently during maintenance, but the two consecutive weeks of higher stocks stifled some bearish expectations in the market. With fewer traders supporting prices, prices tumbled.
Argo was assessed at $1.5650/gal Monday, down from $1.6050/gal on April 24. The front-month CBOT corn futures contract climbed 10 cents to $3.6925/bushel Monday from $3.5925/bu on April 24.
Heavy rains in the Midwest bolstered corn prices as plantings in the US' primary corn growing region continued to be delayed. Additional support came from farmers choosing to plant soybeans rather than corn.
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.
