SE Asia fuel ethanol prices rise on CBOT ethanol futures

05 April 2017 08:31 Source:ICIS News

(Photographer: Design Pics Inc/REX/Shutterstock)

SINGAPORE (ICIS)--Fuel-grade ethanol prices in the southeast (SE) Asian import market were higher in the week ended 5 April, tracking firmer values of ethanol futures traded on the Chicago Board of Trade (CBOT) exchange, market sources said on Wednesday.

US ethanol futures were driven higher after the US Department of Agriculture published its Prospective Planting report on 31 March, in which it projected corn planted area for all purposes in 2017 to be at 90 mln acres, down 4% from last year but still considered a huge crop.

In the absence of any other concrete transactions in Asia during the week, workable buying-selling indications for anhydrous fuel-grade ethanol were quoted at $518-$522 per cubic meter (cbm) CFR (cost & freight) SE Asia. That was higher than in the week ended 29 March when the workable range was at $503-$506/cbm CFR SE Asia.

There was muted demand from the key ethanol buyer in the Asia-Pacific, the Philippines, but prices were heard to be higher as they followed the gains on the CBOT exchange over the last few sessions.

That coupled with the regular maintenance season among US producers suggested coming data might show lower inventories and push prices up, market sources said.

The latest data from the US Energy Information Administration (EIA) showed that for the week ended 24 March, ethanol production rose to 1.054m bbl/day from 1.044m bbl/day the prior week. Year on year, production was 6.3% stronger than 992,000 bbl/day.

SE Asia competes with countries like Brazil for cargoes of US-origin anhydrous ethanol.

Ethanol imports into Brazil hit record highs in the first three months of this year, reaching an estimated 600,000 cbm, prompting the Brazilian government to consider the reinstatement of a 20% import tax on ethanol.

Brazil eliminated the import tax in 2010.

Market sources said part of the current week’s increase in prices was due to expectations that ethanol shipments to Brazil might surge before the import duty was re-introduced.

Top image: A combine harvests grain corn and unloads the corn into a grain wagon

By Izham Ahmad