Argo ethanol premium to paper market weakens with little exp
- Source: chemnet
benchmark Argo ethanol market has lost much of its premium to the
Chicago paper market over the last few days amid weakness in US
physical market feels a bit unsettled," said one source.
"I'm not sure what to think here."
rebounded slightly to a 1.75-cent premium to the front-month Chicago
ethanol swap Friday morning after S&P Global Platts assessed it at
a 1.3-cent premium Thursday.
Monday the premium was 5.7 cents.
premium is currently near its narrowest since late August, but last
month's move was largely due to an end of month move in the markets
ahead of the front-month swap rolling while the recent fall in premium
came as the Argo market tumbled.
seen strength through mid-September despite high production and stocks
amid expectations for maintenance to pull output lower. But prices
began tumbling as producers hedging backed away from the market and
weekly US Energy Information Administration data showed production
recent set of EIA data, released Wednesday, showed production tumbled
37,000 b/d in the week ended September 22. It was the first time
output was below 1 million b/d since June.
also fell, shedding 398,000 barrels. Both production and stocks were
well below market expectations.
lower output and stocks did not bolster prices. Instead, Argo
continued to retreat amid aggressive selling pressure.
September saw a strong barge loading program out of Argo that drew
down stocks in the Illinois terminal. But those barge loadings have
slowed, leaving more product available in the terminal.
doesn't feel great," said a second source after the EIA was
released. "With that much production offline the market should
have been tighter."