Pre-holiday demand release releases ethanol price weakness

The pace of the Spring Festival is approaching. Liquor companies reserve the raw materials for the pre-holidays event. The consumption of ethanol continues to shrink. Ethanol consumption continues to shrink. Currently, there is no intention to stop production for the Spring Festival. The inventory of ethanol will continue to increase during the Spring Festival. The enthusiasm of the ethanol companies to take the initiative is strong. Due to the catalysis of the weaker ethanol price, due to this, the ethanol price has continued to show steady and weak momentum since last week.

The recent ethanol price cuts are still mainly concentrated in the northeast region. The northeastern region is a concentrated area for corn ethanol production enterprises. The current high value of supply starts during the peak season. In the market environment where downstream demand continues to weaken, ethanol prices in the northeast region are vulnerable. Judging from the current market situation, the ethanol companies in the Northeast do not have plans to suspend production for the Spring Festival. The ethanol supply in the future is still loose, and ethanol prices are still weak.

With the end of the purchase of downstream liquor companies, ethanol sales in all parts of the country have been significantly weakened, and the inventory of molasses and cassava ethanol in the south has risen. It has been difficult to take the goods and the prices have also dropped. Competition pressure in the ethanol market has gradually increased.

Although the recent weakening of ethanol raw material prices in the production areas has eased the pressure on raw material costs for ethanol companies, with the closing of raw material preparation activities for feed companies before the Spring Festival, the rise in ethanol by-product prices has been limited, and the ethanol production cost offset effect has been compressed. The recent domestic DDGS market conditions are generally stable. Under the current domestic DDGS spreads, the price gap between domestic soybean meal and DDGS is relatively small, the price advantage of DDGS declines, and the high price of imported DDGS and tight supply are the two major factors. Short-term DDGS spot prices will continue to be mainly stable.

In terms of raw materials, the prices of corn in northeastern production areas have been weak since last week, and deep-processing enterprises in Heilongjiang and Jilin have successively lowered their purchase prices for plant corn, and Heilongjiang has seen significant price cuts. Due to the current slow progress in the sales of corn in the northeastern production areas and the relative abundance of market supply in the later period, grain quality and moisture problems have caused the market to see corn futures in northeastern Heilongjiang and other places rise. Enterprises have purchased the current raw materials in a certain warehouse environment. The enthusiasm has declined.

Considering all factors, with the continuous decline in downstream consumption, the normal start-up of ethanol production companies will lead to the continuous increase in ethanol supply, and the company’s sales pressure will continue to increase. Affected by this, the overall ethanol price will continue to operate weakly in the near future. Although most ethanol companies currently hope to purchase the final raw materials for the pre-holiday downstream companies, the price of ethanol is unlikely to improve significantly in the environment where supply is generally loose and the post-holiday market is expected to be cautious.