US ethanol’s recent pursuit of gasoline’s nosedive has reminded me of the Gin Blossoms classic, “Follow You Down.” In the chorus of that 1996 hit, the band sings, “Anywhere you go, I’ll follow you down. I’ll follow you down, but not that far.” That’s basically where US ethanol prices are at right now: Looking at gasoline prices, saying, “I’ll follow you down, but not that far.” Ethanol maintained a discount to gasoline as long as possible, following gasoline all the way down to levels not seen in more than a decade. As gasoline tracks crude into 12-year lows, ethanol has also ventured into its cheapest price since before the US Renewable Fuel Standard was originated in 2005, when the government began requiring blenders to use ethanol at escalating levels. On January 13, the Platts benchmark Chicago Argo ethanol assessment reached $1.2650/gal, the lowest level since June 2005. Meanwhile, the Platts CBOB Chicago pipe assessment was at 90.33 cents/gal, which was a fourth straight record-low assessment that was further topped in the ensuing four sessions, dipping to 82.25 cents/gal on January 20. The ethanol assessment, on the other hand, shifted gears, stringing together its first five-day rally since October. Ethanol seems to
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Source: CTRM Center