|
|
Ethanol Monitor: Ethanol Cash Margins: Increased Firm Ethanol Prices and DDG Values Offset by Rising Corn Prices
Ethanol Prices Continue to Rally - Ethanol prices continue to rally in 2008, closing at $2.31/gal on 1/25/08. This level of pricing represents the highest pricing we have seen since June of 2007, signaling improving ethanol market fundamentals.
Ethanol Now Selling at A Premium to RBOB Gasoline - For the first time in 5 months ethanol is selling at a premium to RBOB gasoline! (albeit just +7c, but noteworthy nonetheless)
Ethanol Margins Relatively Flat - Improving ethanol and DDG values combined with declining natural gas prices were not enough to effectively offset sharp increases in corn prices as ethanol cash margins declined modestly by -1c/gal versus the previous week. Current cash margins reside at 34c/gal, up +30c/gal from the previous low of $0.04/gal reached back in September of 2007.
Corn Prices Continue to Climb - Cash corn prices rose by +6c/bulast week to $4.64/bu and remain near all time highs, creating further headwinds for ethanol production margins. Nonetheless, improving ethanol prices (over the past three months) have more than offset rising corn prices, resulting in improved ethanol profitability.
Days of Ethanol Inventory Remain Tight - According to the latest data from the Energy Information Administration (EIA), ethanol inventories remained tight over the month of October with days of ethanol inventories coming in at 24 days; well below the ethanol industry's average historical days-of-inventory level of 32 days. This suggests that new ethanol capacity coming online is being absorbed.
Utilization Rates Remain High - Lastly, the latest EIA data indicates that the ethanol industry continued to run at maximum capacity during the month of October.
| |
|
Ethanol.
