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US ethanol margin slips on week

Houston — The US ethanol crush margin sank over the past week, moving to 1.84 cents/gal Monday from 6.19 cents/gal on September 4, the last time the Platts Crush Margin Tracker was published.

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US markets were closed on September 3 for the Labor Day holiday.

The benchmark Argo market remained above its recent seven-month lows, but weakened while corn gained.

S&P Global Platts assessed Argo at $1.2880/gal Monday, down from $1.3280/gal on September 4.

A weekly Energy Information Administration report released September 6 showed US ethanol production averaged 1.087 million b/d in the week ended August 31, up 17,000 b/d from the previous week. Compared with the same week in 2017, production was 27,000 b/d, or 2.55%, higher.

Lower production from fall maintenance might not be seen until the end of September.

Stocks shed a total of 358,000 barrels, driven by a lone draw in the Gulf Coast. Inventories were 1.587 million barrels above the same week last year.

The Gulf Coast fell by 1.222 million barrels to finish with 3.926 million barrels, the lowest volume in the region since late May. The Gulf Coast is the most common origin for ethanol exports from the US. A source said that a large export remained the driver behind falling inventories in the region, as well as some barge movements along the coast.

All other regions added inventories amid the high production rates and tapering demand.

The front-month corn futures contract settled at $3.5550/bushel Monday, up 1 cent/bu from September 4.

A simple crush margin can be calculated by dividing the cost of corn per bushel by 2.8, the number of gallons of ethanol that a bushel of corn can produce. The resulting number is the cost of corn per gallon of ethanol. -- Joshua Pedrick, joshua.pedrick@spglobal.com

-- Edited by Annie Siebert, newsdesk@spglobal.com