Ethanol, Fuels and Co-Product Pricing
Market Outlook: U.S. ethanol prices are lower to start the week, diverging from last week’s gains. Nearby CBOT ethanol futures are down 0.8 percent from Friday (when they finished the week up 2.0 percent) while Midwest wholesale rack ethanol prices are down 0.2 percent at 41.50 cents/liter (157.08 cents/gallon).
FOB Houston ethanol prices finished last week 1.8 percent higher and are extending those gains in early week trading. FOB Houston prices are up 0.1 percent from Friday at 41.160 cents/liter (155.06 cents/gallon), an increase of 0.051 cents/liter (0.19 cents/gallon).
FOB Santos, Brazil ethanol prices ended last week sharply lower (down 5.1 percent) while this week’s prices have fallen another 4.4 percent. FOB Santos ethanol prices are currently quoted at 53.221 cents/liter, or 201.465 cents/gallon. FOB Santos ethanol prices have fallen 8 percent during the past month, which coincides with the beginning of sugar cane harvest and Brazilian mills’ recent decision to prioritize producing ethanol over sugar.
Rising FOB Gulf values and the sharp drop in Brazilian prices caused a significant shift in the FOB Houston-Santos price spread last week. The spread narrowed 20.4 percent to -14.551 cents/liter (-55.08 cents/gallon) and is continuing that trend this week. Prices show the spread narrowing 17.1 percent to -12.062 cents/liter (-45.659 cents/gallon). The FOB Houston-Santos spread tends to narrow seasonally through the spring and this year looks to follow that trend. Specifically, the spread’s current trajectory is similar to that experienced in the spring of 2016.
MTBE prices were mostly steady last week and are higher to start this week. Last week, prices rose 0.4 percent by Friday’s close and are 1.2 percent higher through Tuesday’s trading. MTBE prices are last quoted at 60.75 cents/liter (229.97 cents/gallon) and are valued at a 19.593 cents/liter premium (74.17 cents/gallon) premium to FOB Houston ethanol.
BTX component prices are higher to start the week, following last week’s steady/higher trade. Benzene prices finished last week steady (up 0.3 percent) and are up another 0.5 percent so far this week. Toluene prices fell 1.9 percent last week and are 1.9 percent higher this week, while xylene prices rose 0.8 percent last week and are 6.1 percent higher this week. The estimated weighted average aromatic price is currently 72.66 cents/liter (272.60 cents/gallon), up 4.1 percent from Friday’s close. The weighted average BTX price is 31.503 cents/liter (119.25 cents/gallon) higher than FOB Houston ethanol prices.
Following last week’s sharp gains, gasoline and petroleum products are slightly lower to start this week. RBOB futures are down 0.3 percent from Friday’s close (down 0.18 cents/liter or 0.69 cents/gallon) while 84 octane RBOB and 87 octane CBOB are 2.0 and 1.6 percent lower, respectively. WTI crude oil futures are up $0.02/barrel from last week while Brent futures fell $0.18/barrel.
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