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Sliding prices weaken US ethanol crush margin

Houston — The US ethanol crush margin slid to 11.30 cents/gal Monday from 21.45 cents/gal on October 14.

Weaker ethanol prices were the primary driver behind the lower margin, which left producers continuing to eye shutdowns.

"It will be interesting," said one source. "Some tough decisions."

US ethanol prices came off their highs reached in early October as tightness for prompt product eased.

Recent plant shutdowns and the end of seasonal maintenance kept focus on where production will stabilize in the coming weeks, but the US Energy Information Administration reported only a mild increase in the most recent reporting period.

US ethanol production averaged 971,000 b/d in the week that ended October 11, an 8,000 b/d week-on-week increase, according to the EIA.

Total stocks added 837,000 barrels in the same week to finish with 22.061 million barrels. Stocks were just over 2 million barrels lower year on year, thanks in large part to a nearly 2 million-barrel decline in the previous week.

Inventories rose in all five defined regions.

Platts assessed Chicago Argo at $1.4960/gal Monday, down from $1.6350/gal on October 14.

The front-month corn futures contract settled at $3.8725/bushel on Monday, down from $3.9775/bu on October 14.

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.

-- Josh Pedrick, joshua.pedrick@spglobal.com

-- Edited by Derek Sands, newsdesk@spglobal.com

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