Ethanol Market and Pricing Data – October 31, 2017

1. Ethanol, Fuels and Co-Product Pricing

Market Outlook: CBOT ethanol futures are higher to start the week as strength in Chicago cash prices rallies the market. Nearby CBOT futures are up 0.74 cents/liter (2.8 cents/gallon) week-over-week while spot Chicago and Chicago Rule 11 product gained 0.26 cents/liter (1 cent/gallon) in early-week trading. Midwest rack prices are 0.26 cents/liter (0.98 cents/gallon) softer this week while FOB U.S. Gulf (Houston) prices are unchanged. The latest quotes peg FOB Houston product at 38.833 cents/liter (147 cents/gallon).

Ethanol sales have been brisk in Brazil during the last month, sparking higher prices. FOB Santos anhydrous ethanol rose 0.291 cents/liter (1.1 cents/gallon) this week. Hydrous ethanol prices are rising internally, losing some competitiveness against gasoline. The hydrous ethanol/gasoline price ratio rose in the South East, South, and North East of Brazil while staying steady in the Center West region. The ratio is 67 percent in the South East, 73 percent in the South, 69 percent in the Center West, and 80 percent in the East. Typically, hydrous ethanol is competitive against gasoline when its price is 70 percent or less of the fossil fuel.

Higher FOB Santos prices caused the Houston-Santos FOB price spread to increase this week. The spread, last quoted at -17.462 cents/liter (-66.1 cents/gallon) widened 0.291 cents/liter (1.1 cents/gallon) this week. The spread is hovering less than 0.26 cents/liter (1 cent/gallon) above six-month lows as of its last quote.

MTBE prices are sharply higher this week and set a new six-month record high. MTBE prices rose 2.1 percent (on top of last week’s 3.7 percent increase), or 1.13 cents/liter (4.29 cents/liter) to end at 56.08 cents/liter ($2.126/gallon). BTX prices were mixed with Benzene prices gaining 1 percent and Toluene and Xylene prices falling 2.6 percent and 1.7 percent, respectively. The weighted average aromatic price is currently estimated at 62.8 cents/gallon ($2.37/gallon) higher (1.6 percent) to end at $0.633/liter ($2.37/gallon). The weighted average BTX price is 25.08 cents/liter (94.9 cents/gallon) higher than FOB Houston ethanol prices and MTBE FOB Gulf is 17.5 cents/liter (66.34 cents/gallon) higher than U.S.-origin ethanol.

Gasoline prices are higher this week, driven by crude oil prices rising on macroeconomic news. RBOB futures are up 1.69 cents/liter (6.4 cents/gallon) this week while 83.7 octane RBOB gasoline and 87 octane RBOB FOB Houston increased 0.84 cents/liter (3.2 cents/gallon) and 0.77 cents/liter (2.9 cents/gallon) this week. WTI and Brent crude oil futures are 3.7 percent and 4.3 percent higher this week, last quoted at $54.41 and $60.86/barrel, respectively.

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