The US ethanol crush margin on Aug. 17 rose to 13.49 cents/gal, an increase of 1.73 cents since S&P Global Platts last published its crush margin tracker on Aug. 10.
The crush margin rose due to the recent upswing in ethanol prices, which countered a large rally in corn futures.
Platts assessed Chicago Argo ethanol at $1.3170/gal on Aug. 17, up 7.3 cents since Aug. 10. Ethanol prices have risen for nine straight sessions due to supply concerns. A derecho that ripped through the US Midwest last week shut down at least one large ethanol production facility in Iowa. Furthermore, the Aug. 12 report from the US Energy Information Administration showed that ethanol production unexpectedly dropped 13,000 b/d to 918,000 b/d for the week ended Aug. 7.
S&P Global Platts Analytics forecast that production will rise 20,000 b/d to 938,000 b/d in the upcoming Aug. 19 report.
Front-month CBOT corn futures, on the other hand, rose 20.50 cents to $3.3150/bu from Aug. 10. Uncertainty about the damage inflicted to the US corn crop by the last week's massive storm pushed corn prices higher.
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.
