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Ethanol Prices Edged up in the United States Due to Supply Chain Disruption

The ethanol cost evaluation edged up in the United States due to the disruption of the supply chain. Ethanol prices in the North American market recovered their strength and saw a rise in the second quarter of the year 2022.

By the conclusion of the quarter, major producers of ethanol reported expenses of USD 998 per MT, FOB Texas. Following the conflict between Russia and Ukraine, there was commodity inflation. In the second quarter, corn and sugarcane prices skyrocketed as the crop yield in the local market declined.

The price of ethanol increased by 2 percent as compared to quarter one because of rising production costs and increasing feedstock costs. The dynamics of the ethanol market in the North American region were controlled by the significant demand for biofuel production in the local markets.

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According to the Renewable Fuels Association, around 70 percent of the ethanol produced in the United States was transported by rail, mostly from the Midwest to coastal markets. The United States imported a minor amount of ethanol from Brazil, mostly for the US West Coast. Trucks and barges were used to transport the ethanol, about 10 percent or so was transported via barge.

At ethanol production plants if storage tanks are full then they are not transported. Moreover, an alternative is used which is throttling down the ethanol, according to market experts. To stratify the demand of 910,000 b/d, the EIA anticipated ethanol production to be an average of 1.01 million/d this year. As per EIA data, United States ethanol stockpiles were at 21.138 million barrels in the first week of September, which was more than the five-year average.

In response to the impending strike, the prices for ethanol in the United States again increased on September 13. Chicago pipeline ethanol was valued at USD 2.659 per gallon and New York Harbor ethanol was valued at USD 2.76 per gallon.

Following an increase in the cost of corn feedstocks, NYH prices increased by 30 percent whereas Chicago prices hyped up by 25 percent since 8 September. As a result, USDA slashed its September expected yields for the United States maize production by 2.9 bushels/acre from its August forecast.

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As per procurement resources, due to supply disruptions, the cost analysis of ethanol increased slightly in the United States. In the second quarter of 2022, ethanol prices in the North American market regained momentum and increased. The EIA projected ethanol production was at an average of 1.01 million b/d this year.

The cost valuation in the first week of September for United States ethanol stocks was USD 21.138 million barrels. On September 13, ethanol prices in the United States rose once more in response to the strikes. Ethanol from the Chicago pipeline was priced at USD 2.69 per gallon and the New York harbor was valued at USD 2.76 per gallon.

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