Chicago spot ethanol prices hit a roughly 12-month low Thursday on the back of market length, assessed at 209.25 cents/gal ITT.
The last time prices were near this level was on December 10, 2010, when the price was assessed at 207.50 cents/gal.
Sources talked of market length and noted that some participants began to sell off in mid-November, after prices touched 310 cents/gal on November 17. Since that time, prices have shed some over 101 cents/gal as sellers outnumbered buyers and players sought to liquidate inventories.
Still, some participants believed that prices could reach a floor as margins continued to shrink. March CBOT corn futures Thursday settled at $5.79/bushel which would put ethanol production costs at just over 209 cents/gal (using a conversion factor of 2.77). In the Platts Market on Close window, Global purchased 5,000 barrels from Noble at 209.50 cents/gal Chicago ITT.
Sources said that if spot prices fail to reverse course, ultimately producers could cut rates. However, one participant anticipated a lag if producers do slash rates.
"I would say that they're coming in January or February," said one source. "Plants are still doing well enough following the higher margins in October-November."
Meanwhile, prices remained weak across the board with December New York Harbor assessed at 226 cents/gal, while Houston ethanol was assessed at 222 cents/gal, a roughly 13 cents/gal premium to the Chicago price. R11 rail prices were assessed Thursday at 206.50 cents/gal.
