Ethanol prices spike on heels of corn rally

The benchmark Chicago Argo ethanol assessment shattered records on Jan. 12, propelled higher on the heels of a massive surge in corn futures.

S&P Global Platts assessed Chicago Argo ethanol at $1.6290/gal, a gain of 9.7 cents day on day, and the highest level since reaching $1.70/gal on Nov. 26, 2020.

Other ethanol hubs saw gains of 6.75 cents to 10.75 cents day on day.

The surge came after the US Department of Agriculture released its monthly supply and demand report, known as the WASDE. The agency revised its estimates for corn yield and ending stocks, sending corn futures on a dizzying ascent.

Within an hour of the report, the CBOT halted trading on the March, May and July contracts, which had all met the 25-cent daily price limit.

CBOT March corn futures settled 25 cents higher at $5.1725/bushel -- the highest settle since July 23, 2013.

The corn rally thinned liquidity in ethanol markets, with many buyers and sellers sitting out of the market for most of the morning.

"It's a pretty wild day in corn," one market source told S&P Global Platts. "Everything is high and wide in ethanol."

Corn futures had already been pushing ethanol prices up in recent weeks. Argo ethanol prices have risen 25.2 cents/gal since Dec. 10, 2020. At the same time, corn futures, pressured by worries about the impact of dry weather on the South American corn crop and rising export interest for US corn, have increased 97 cents/bu.