US Ethanol Prices Rebound As Production Rates Improve

Texas- Ethanol market dynamics in the US regained strength as the operational activity in the country increased, accompanied by the demand for Ethanol-based fuel in the domestic market. The US market bounced back, breaking the declining prices streak in the domestic market as the country resumed the operational rate after the week holidays on New Year, consequently raising the gasoline and other Ethanol-derived demand from the transportation sector. The US government data displayed improvement in the employment rate in the last month amidst the inclining inflation rate giving some hope in the industrial sector. With the growth in Ethanol prices and production activity, the final prices of Ethanol were observed at USD 767 per MT, FOB Texas (USA).

The inventories capacity in the US market, however, declined in the domestic market amidst the increasing demand. Major upstream required for Ethanol production in the American region includes corn, and the yield capacity in the region varied geographically. The weather in South America remains largely the same in January 2023 as it has done so far this season, with Argentina and parts of southern Brazil seeing hotter, drier conditions and central Brazil experiencing wetter conditions with fewer heat waves. Drought is affecting crops in a generous portion of Argentina's agricultural regions. At the start of 2023, Brazil's domestic corn market is projected to become competitive due to China's debut as a significant buyer and will sustain prices.

On the other hand, the North American region faced challenging issues as the cold weather hampered the supply chain for the past few weeks. The volume of gasoline delivered to the US market was high, according to the Renewable Fuels Association, even though net inputs by refiners and blenders were at their lowest level in a year. As per ChemAnalyst, the market prices of Ethanol are expected to incline at a steady pace in the regional market as the demand for Ethanol-based gasoline and other downstream sectors such as disinfectant and food beverages industries may incline in the upcoming weeks.