Argo Plunge to 3mos Low on Glutted Supply, Demand Falloff


   
   WASHINGTON, D.C. (DTN) -- Spot ethanol prices across major U.S. trading hubs 
on Friday posted losses in the range of 1.25cts to 3.5cts, with product at the 
Argo terminal in Chicago dropping to the lowest price point since mid.-August 
at $1.36 amid building stockpiles in the Midwest PAD 2 district and slowing 
blending demand nationwide as surging COVID cases dent driving activity heading 
into the Thanksgiving holiday.

   Wednesday's release of inventory data from the U.S. Energy Information 
Administration was bearish for the ethanol complex, showing another weekly 
increase in nationwide stockpiles and a sharp drop-off in blending demand. 
Blending activity, a measure of demand, fell 2.5% in the most recent week to 
the lowest weekly rate since mid-June at 813,000 bpd. This correlated with 
weaker demand for motor gasoline, which dropped 504,000 bpd to 8.258 million 
bpd in the reviewed week, widening its year-on-year deficit to 10%.

   Apple data shows traffic volumes in the United States has taken a hard hit 
from surging COVID cases and subsequent restrictions on businesses and personal 
mobility. With Centers of Disease Control issuing a warning against travel 
during the Thanksgiving holiday, traders see little upside for ethanol demand 
in coming weeks.

   Lower blending demand has led to another weekly build in nationwide 
stockpiles that has now increased for the third week in row to 20.203 million 
bbl -- the highest since the first week of September. Midwest PADD 2 stocks 
have risen over 3% to 6.3 million bbl, while East Coast PADD 1 stockpiles 
declined a second week, down 1.6% to 6.2 million bbl. At the Gulf Coast PADD 3, 
stocks dropped 2.4% to 4.1 million bbl and stocks along the West Coast PADD 5 
were marginally higher at 3.1 million bbl.

    

    

   Liubov Georges, 1.646.359.4088, liubov.georges@dtn.com, http://www.dtn.com.




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