Ethanol, Fuels and Co-Product Pricing
Market Outlook: U.S. ethanol prices are lower to start the week, once again diverging from last week’s gains. Nearby CBOT ethanol futures are down 2.3 percent from Friday (when they finished the week up 1.8 percent) while Midwest wholesale rack ethanol prices are down 0.6 percent at 42.30 cents/liter (160.12 cents/gallon). The past few weeks have featured a pattern of early-week pricing pressure that is followed by stronger prices at the end of the week.
FOB Houston ethanol prices finished last week 1.4 percent higher and are holding those gains in early week trading. FOB Houston prices are up 0.2 percent from Friday at 41.746 cents/liter (158.025 cents/gallon), an increase of 0.067 cents/liter (0.26 cents/gallon).
FOB Santos, Brazil ethanol prices continued their seasonal decline last week, falling 4 percent by Friday’s close. This week, prices are down 1.5 percent so far at 52.643 cents/liter (199.275 cents/gallon). As noted in last week’s report, FOB Santos ethanol prices have declined in recent weeks as Brazilian ethanol mills are prioritizing ethanol production over sugar amid the sugar cane harvest season.
Rising FOB Gulf values and the drop in Brazilian prices caused a significant shift in the FOB Houston-Santos price spread last week. The spread narrowed 19.3 percent to -11.741 cents/liter (-44.443 cents/gallon) and is continuing that trend this week. Prices show the spread narrowing 7.2 percent to -10.897 cents/liter (-41.250 cents/gallon). As noted last week, the spread tends to weaken seasonally and currently is following a trend similar to that of 2016.
MTBE prices were slightly higher last week and are steady to start this week. Last week, prices rose 1.1 percent by Friday’s close and up 0.5 through Tuesday’s trading. MTBE prices are last quoted at 60.95 cents/liter (230.70 cents/gallon) and are valued at a 19.199 cents/liter premium (72.68 cents/gallon) premium to FOB Houston ethanol.
BTX component prices are mostly higher to start the week, following last week’s higher trade. Benzene prices finished last week steady (up 0.4 percent) and are down 0.9 percent so far this week. Toluene prices gained 2.7 percent last week and are 1.8 percent higher this week, while xylene prices rose 7.3 percent last week and are 2.7 percent higher this week. The estimated weighted average aromatic price is currently 74.73 cents/liter (282.90 cents/gallon), up 2.0 percent from Friday’s close. The weighted average BTX price is 32.988 cents/liter (124.87 cents/gallon) higher than FOB Houston ethanol prices.
Gasoline and petroleum products are higher in early week trading, following last week’s price appreciation. RBOB futures are down 0.3 percent from Friday’s close (0.16 cents/liter or 0.63 cents/gallon) while 84 octane RBOB and 87 octane CBOB are 0.6 percent lower and 0.4 percent higher, respectively. WTI crude oil futures are down $0.66/barrel from last week while Brent futures are $0.50/barrel lower.
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