Ethanol Report

December 13, 2006

BY Spencer Kelly

Nov. 1—Ethanol markets revealed stronger pricing through autumn, even though many markets started to sell off from their recent highs going into November.

Producers in the Midwest ended October selling FOB plant truck volumes throughout the $1.90s per gallon, in limited volumes to be sure, but also representing 10 cents or so less than deals done earlier in the month. Chicago-area rail and truck trading last heard around $2 per gallon was still up about 30 cents from a month ago, but pared back by a dime or so from talking ranges reached late in the month. Barge-volume deals for November material hovered around a nickel either side of the $2 per gallon mark.

The East Coast was the scene of some hyped ethanol spot prices after the derailment of an ethanol unit train caused a rail slowdown and exacerbated already existing shortness in prompt barrels. Spot barge deals in the harbor jumped to $2.22 per gallon before things settled back.

Market sources noted other factors that put some legs under ethanol values, including buyers entering the prompt market to refill depleted storage. Sources noted that as ethanol prices fell in early autumn, some held off purchases—expecting lower prices ahead—and jumped in when markets started to recover, pushing prices even higher. Steadying gasoline prices were also a factor.

Out West, prompt ethanol supply was also thin, with next-day and next-few-days delivered rail deals seen in Reno and Phoenix at $2.29 to $2.30 per gallon. Those who could wait a week or two were likely to find $2.15 per gallon or less, more in line with the latest California spot deals.

For more information, contact OPIS Fuel Ethanol Report at (888) 301-2645, ext. 2478.

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