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Chicago Argo ethanol reaches lowest level since 2003

Houston — S&P Global Platts benchmark Chicago Argo ethanol assessment Monday reached its lowest level in more than 15 years.

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Platts assessed Chicago Argo ethanol at $1.1725/gal, the lowest level since reaching $1.1550/gal on July 29, 2003. Monday's assessment also marked the fourth-lowest assessment since the company began the assessment in June 2003.

Since being assessed at $1.5130/gal on April 20, Chicago ethanol prices have dropped steadily and plummeted during the fall after reaching $1.4450/gal on August 1.

US ethanol markets have seen high production most of the year as high margins encouraged producers to keep producing the biofuel. Ethanol production has remained above 1 billion b/d mark for most of 2018, even after the peak demand of summer driving season.

However, margins have eroded in recent weeks as corn prices recovered in the last three months. Crush margins dipped from 22 cents/gal on July 13 to minus 16.41 cents/gal on December 10.

At the same time, inventories have fluctuated in recent months, often reaching a 1 million-plus barrel year-on-year increase. The combination between high production and high inventories have put immense downward pressure on ethanol prices.

Reports have emerged that some ethanol plants have reduced production or idled plants completely due to falling margins. However, government data has yet to reflect such a development.

-- Wesley Swift, wesley.swift@spglobal.com

-- Edited by Pankti Mehta, newsdesk@spglobal.com