Argo DN 5% on Bearish Stats, Corn Retreats to 2-1/2mos Low

    

   WASHINGTON, D.C. (DTN) -- Spot ethanol prices at the country's major hubs 
nosedived in afternoon trade Wednesday following a steep jump in U.S. ethanol 
stockpiles last week reported by federal data and continued gains in production 
rates amid softening blending demand for corn fuel, while heavy selling in the 
feedstock corn market further weighed on cash prices. 

   U.S. Energy Information Administration data reported ethanol stocks 
increased 1.2 million bbl or 5.8% to 21.8 million bbl---a fresh five-week high, 
with gains realized in all PAD districts, except for PADD 4. 

   Ethanol plant production increased 12,000 bpd to 1.072 million bpd during 
the first week of December, a 23-week high and 2.5% above year ago. During the 
four weeks ended Dec. 6, ethanol plant output averaged 1.056 million bpd 
compared with a 1.051 million bpd production rate during the corresponding 
period in 2018.

   The supply increase was partly realized by a steep drop in blending demand, 
with refiner and blender net input tumbling 44,000 bpd or 4.9% to 858,000 bpd, 
the lowest weekly rate of blending activity since the first week of 2019.

   Adding to the bearishness, Chicago Board of Trade December corn contract 
plunged 5.4cts to a fresh 2-1/2 month low $3.576 bushel settlement amid heavy 
fund selling a day after U.S. Department of Agriculture left unchanged its 
supply and demand outlook in its December WASDE report. Considering the 
season's many hardships, the market was surprised the agency didn't downgrade 
estimates for the corn harvest, sales and exports.

   Following corn lower, CBOT January ethanol futures slipped 1.6cts to a 
$1.322 gallon settlement and New York Mercantile Exchange January RBOB futures 
dropped 2.64cts to $1.6261 gallon.

   In physical trade, sources pegged ethanol at the Argo terminal 7cts lower at 
$1.38 gallon, while Harbor ethanol declined 4.5cts to end the session at $1.50 
gallon. Houston ethanol was last discussed at $1.50 gallon, down 7.5cts on the 
session, and product in southern and northern California declined a penny to 
$1.6650 gallon.

   In compliance trade, 2020 D6 RINs were offered at 19cts and 2019 D6 RINs 
were last discussed at 12.25cts, down 0.63cts from session prior. 2020 
biomass-based diesel D4 RINs were indexed at 57.5cts and 2019 D4s were pegged 
at 57.25cts. 

   Liubov Georges, 1.646.359.4088, liubov.georges@dtn.com, www.dtn.com. (c) 
2019 DTN. All rights reserved.