The US ethanol crush margin on July 20 crumbled to 7.07 cents/gal, down by 27.34 cents since S&P Global Platts last published its crush margin tracker on July 13.
The crush margin plunged due to sinking prices of Chicago Argo ethanol, which has been in a free-fall since Dec. 8.
Platts assessed Chicago Argo ethanol at $1.2430/gal on July 20, down 29 cents from July 13. After thin inventories pushed prices to seven-month highs on July 8, the values have plummeted. Sellers looking to take advantage of the high premiums charged at the Argo terminal have diverted ethanol from nearby rail markets to Argo, swelling supplies and quashing prices.
Front-month CBOT corn futures saw smaller declines, falling 5.75 cents from July 13. Corn values were volatile last week while the market weighed weather concerns against export demand.
The crush margin measures the cost of ethanol against the cost of feedstock corn used to produce the biofuel. 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.
US ethanol production averaged 931,000 b/d for the week ended July 10, an increase of 17,000 b/d, and the 11th consecutive rise, data from the US Energy Information Administration showed July 15.
As per the same report, ethanol stocks fell by 12,000 barrels to 20.608 million barrels.
S&P Global Platts Analytics forecasts that production will rise to 961,000 b/d in the upcoming July 22 report.
