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Chicago spot ethanol prices hit a roughly 12-month low Thursday on the back of market length, 7447-40-7 assessed at 209.25 cents/gal ITT. 67-63-0
The last time prices were near this level was on December 10, 2010, when the price was assessed at 207.50 cents/gal.
Sources talked of market length and noted that some participants began to sell off in mid-November, after prices touched 310 cents/gal on November 17. Since that time, prices have shed some over 101 cents/gal as sellers outnumbered buyers and players sought to liquidate inventories.
Still, some participants believed that prices could reach a floor as margins continued to shrink. March CBOT corn futures Thursday settled at $5.79/bushel which would put ethanol production costs at just over 209 cents/gal (using a conversion factor of 2.77). In the Platts Market on Close window, Global purchased 5,000 barrels from Noble at 209.50 cents/gal Chicago ITT.
Sources said that if spot prices fail to reverse course, ultimately producers could cut rates. However, one participant anticipated a lag if producers do slash rates.
I would say that theyre coming in January or February, said one source. Plants are still doing well enough following the higher margins in October-November.
Meanwhile, prices remained weak across the board with December New York Harbor assessed at 226 cents/gal, 7681-11-0 while Houston ethanol was assessed at 222 cents/gal, a roughly 13 cents/gal premium to the Chicago price. R11 rail prices were assessed Thursday at 206.50 cents/gal.
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