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US fuel ethanol prices down despite gains in corn market
US fuel ethanol prices fell during the week ended 3 August as lower energy prices outweighed gains in the corn market.
The front-month corn future fell by 5 cents/bushel on Wednesday, but the feedstock added 2% for the week in response to new projections showing crop yields this year may be lower than originally anticipated.
Market participants cited the release of two new private forecasts this week showing corn yields at 150.0 bushels/acre and 153.3 bushels/acre, which are below the latest 158.7 bushel/acre projection by the US Department of Agriculture (USDA).
If the new estimates are correct, US corn ending stocks for the 2011/2012 crop would fall to unprecedented levels, an analyst said, putting the figure below 250m bushels.
The USDA in July predicted ending stocks would total 870m bushels, slightly down from 880m bushels estimated for the 2010/2011 crop.
On the energy front, US crude futures fell for the fourth consecutive session on Wednesday, pressured by supply statistics from the Energy Information Administration (EIA) showing a build in crude and refined products inventories for the last week of July.
The EIA also showed US ethanol inventories rising slightly in the week ended 29 July along with a small increase in the production of the biofuel
Ethanol stocks stood at 18.90m bbl that week, up by 0.2% from 18.87m bbl a week earlier.
Meanwhile, ethanol production totalled 878,000 bbl/day, up 0.5% from 874,000 bbl/day in the week ended 22 July, the EIA said.
US ethanol output in July averaged 880,200 bbl/day, a 2% reduction from 898,600 bbl/day in June, according to government data.
| US weekly ethanol inventories – m bbl (EIA) |
| 29 July | 22 July | 15 July | 8 July | 1 July |
| 18.90 | 18.87 | 19.14 | 18.77 | 18.55 |
Industrial Ethanol
US industrial ethanol contract prices were assessed steady in August, following a Q3 increase for most accounts implemented in July.
The increase for Q3 was the fourth jump in as many quarters for US ethanol contracts. The upward trend stems from higher corn prices over the past year.
The contract ranges refer to small accounts of 50,000-375,000 gal/year on a delivered basis.
The outlook for industrial ethanol points to potential new hikes in October, a producer said, citing strong export demand.
Export demand for US industrial ethanol has increased because tight supply in Brazil is keeping that country mostly out of the international market, the source said.
Other Markets
INEOS has declared force majeure (FM) on its ethanol production at Grangemouth in the UK following an unplanned shutdown which is likely to exacerbate already-tight market conditions, market sources said.
The FM went into effect on 25 July. The company declined to comment on reasons for the outage or possible duration of the shutdown and FM.
Nameplate ethanol capacity at the site is 340,000 tonnes/year.
Market sources said the FM will further tighten the market for industrial ethanol grades and is likely to have a particular localised effect in the UK, as INEOS is the sole domestic synthetic ethanol supplier.
| Prompt | Ethanol | RBOB | Corn | Natgas | Crude |
| Aug 03 | 2.72 | 2.93 | 7.06 | 4.09 | 91.93 |
| July 27 | 2.72 | 3.09 | 6.92 | 4.32 | 97.40 |
| July 20 | 2.89 | 3.14 | 6.88 | 4.50 | 98.14 |
| July 13 | 2.84 | 3.15 | 6.86 | 4.40 | 98.05 |
(Sources: Chicago Board of Trade; NYMEX)
($1 = €0.70)
This week on ICIS ( www.icis.com ):
03/08/2011 11:16 Crude falls on worries over US economic prospects
02/08/2011 22:28 US ADM growth will come through expansion - CEO
02/08/2011 18:59 US Senate approves debt ceiling bill, averts default
29/07/2011 15:53 US Q2 GDP falls to 1.3%, with Q1 revised down to 0.4%
28/07/2011 21:51 Argentine grain consortium to build ethanol plant
