The reduction in the production of ethanol continues to put pressure on corn prices

2020-04-16 12:02:40
Machine translation
The reduction in the production of ethanol continues to put pressure on corn prices

ethanol Production in the United States is rapidly declining for the third straight week, decreasing weekly at 18-25%. This reduces the demand and price of corn in the country and puts pressure on the world market, where there are significant free volumes of corn.

 

the May corn futures in Chicago yesterday fell 3% to 128,97 $/ton, although during the session fell to 127,97 $/t on the data to reduce the production of ethanol.

 

the weekly EIA report showed that ethanol production in the US declined by 17.5% to 570 thousand barrels/day, losing over 3 weeks 44%. As a result, ethanol stocks rose to a record of 27.4 million barrels, which corresponds to the 30-day demand market level 2019 Given the quarantine caused by the decrease in demand, it can take months to see the stocks depleted, even if the industry completely shut down.

 

the Volume of processing of corn for ethanol had dropped to 1.5 mln tons/week, whereas from January to mid-March, the figure was 2.8 million MT/week.

 

Underutilized for three weeks nearly 2.6 million MT of corn indicate that the April USDA forecast annual reduction in the consumption of corn manolovo industry only 10 MT from 138 to 128 million tonnes was too optimistic.

 

the shutdown of plants for the production of ethanol, which is predominantly located in the Midwestern United States, in the region of growing corn will force farmers to sell corn for export, which also suffers from a lack of demand.

 

This week the company is Valero, which is a manufacturer of petroleum products and biofuels, has closed 8 of its 14 plants, while others drastically reduced production through a negative refining margin, resulting in losses for the 1st quarter amounted to $2 billion.

 

Reduction in the production of ethanol has led to higher prices for by-product of processing corn DDGS, which is used by breeders and is actively exported to China and Vietnam. As a consequence, may increase the demand for other types of feed such as soy meal or corn fodder.

 

Prices demand for corn to Vietnam or South Korea dropped to 188-190 $/t C&F that puts pressure on world prices.

 

After the decline in prices for Argentine corn, which last week fell by 5 $/t to 158 $/MT FOB export price of U.S. corn fell by 3-4 $/t to 152-155 $/t FOB US Gulf.

 

Ukrainian corn continues to fall in price and transaction prices for may shipments fell to 176-177 $/t FOB, although demand remains low. But purchase prices at the port are kept at a high level 167-169 $/ton, as traders are unable to close their contracts due to containment of sales manufacturers, who hope for higher prices despite falling demand and prices for oil and ethanol, which will last at least another 4-6 months.

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