Ethanol, Fuels and Co-Product Pricing
Market Outlook: U.S. ethanol prices are mixed to start the week with nearby CBOT ethanol futures up 1.0 percent from Friday (when they finished the week down 2.8 percent) while Midwest wholesale rack ethanol prices are down 0.9 percent at 41.62 cents/liter (157.53 cents/gallon).
FOB Houston ethanol prices finished last week 0.4 percent lower and are extending those losses in early week trading. FOB Houston prices are down 2.4 percent from Friday at 40.473 cents/liter (153.206 cents/gallon), a decrease of 1.045 cents/liter (3.96 cents/gallon).
FOB Santos, Brazil ethanol prices continued their seasonal decline last week, albeit at a slower pace, falling 1.9 percent by Friday’s close. This week, prices are down 1.0 percent at 51.883 cents/liter (196.40 cents/gallon). As noted in last week’s report, FOB Santos ethanol prices have fallen in recent weeks as Brazilian ethanol mills are prioritizing ethanol production over sugar amid the sugar cane harvest season.
Steady FOB Gulf values and the continued weakness in Brazilian prices again narrowed the FOB Houston-Santos price spread last week. The spread fell 7.3 percent to -10.883 cents/liter (-41.194 cents/gallon) but is reversing that trend this week. Prices show the spread widening 4.9 percent to -11.411 cents/liter (-43.194 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 higher to start this week. Last week, prices rose 0.8 percent by Friday’s close and up 1.5 through Tuesday’s trading. MTBE prices are last quoted at 62.05 cents/liter (234.87 cents/gallon) and are valued at a 21.574 cents/liter premium (81.65 cents/gallon) premium to FOB Houston ethanol.
BTX component prices are lower to start the week, following last week’s mostly higher trade. Benzene prices finished last week down 1.2 percent and are down 1.4 percent so far this week. Toluene prices gained 1.5 percent last week and are 0.1 percent lower this week, while xylene prices rose 2.2 percent last week and are 1.2 percent lower this week. The estimated weighted average aromatic price is currently 73.75 cents/liter (279.18 cents/gallon), down 0.9 percent from Friday’s close. The weighted average BTX price is 33.280 cents/liter (125.98 cents/gallon) higher than FOB Houston ethanol prices.
Gasoline and petroleum products are mostly lower in early week trading, following last week’s general price appreciation. RBOB futures are down 2.3 percent from Friday’s close (1.31 cents/liter or 4.95 cents/gallon) while 84 octane RBOB and 87 octane CBOB are 1.9 percent and 1.5 percent lower, respectively. WTI crude oil futures are down $0.63/barrel from last week while Brent futures are $0.74/barrel lower.
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