US Chicago Argo ethanol was assessed at $1.2820/gal Tuesday, up 1.45 cents from Monday, following a bearish estimate for US corn production in the 2015/16 harvest.
The US Department of Agriculture, in its World Agriculture Supply and Demand Estimates report released earlier Tuesday, pegged production at 13.601 billion bushels for the current harvest year, down from the December projection of 13.654 billion bushels due to a smaller yield in corn per acre.
The lower projection affected both physical ethanol and corn futures markets, with CBOT March corn futures settling 5 cents higher at $3.5675/bushel.
The slight rebound could be short lived, as the market adjusts to the preliminary yield report.
"Short lived indeed," said a US ethanol broker, adding, "There's still plenty of corn to be grown. If the yields are good, corn is going down."
The broker said it would not be surprising to see a return to weaker ethanol price levels by the end of the week.
