Hi Mortenm. Sorry for the slow reply, however I was waiting for the last numbers for Q1 to come in before posting.
First, just a reminder. The production margins presented are NOT profit margins. They only reflect the difference in value between the cost of corn and the resulting ethanol and co-products.
I've provided a number of alternatives to using the standard PEIX formula. If all you want is that number, refer to the column labelled "CBOT Near."
I suspect that the actual margin will be somewhat higher than the estimate produced by applying the standard PEIX formula. With the low prices of late I suspect the ratio of return for co-products vs the price of corn might be skewed towards the low side. I tried something with this quarter and used some assumed values for WDGS and corn oil in order to attempt to estimate a value for co-products, as opposed to relying on the 30% guidance that PEIX provides. The results of those calculations are at the bottom of the table. I think they need to be taken with a grain of salt . . .
I've never been able to locate a California market price for wet distillers grains, although a weekly price for DDGS is provided by the USDA. I was able to track the price of wet vs. dry distillers grains for Nebraska. That allowed me to come up with a ratio, which I then applied to the California DDGS price. However, I think this is subject to substantial error, in part because I haven't tracked the Nebraska differential long enough to feel any sense of reliability. I also dug up the data for Q4 to see if it correlated, however it resulted in an unrealistic value for the quarter. I'm including here here more for the sake of feedback than anything else. I do believe the overall value will be higher than the 30% PEIX standard value, but I don't expect it to be as high as the alternative values reflect.
I tracked the data for Nebraska and Illinois. While it doesn't apply to this quarter, I felt it would be helpful to gain an understanding of what the USDA standard will compare to actual reported profits. I also tracked the price of milo in California, Nebraska (the quoted price is within 20 miles of the Aventine plant) and Kansas (as the price there at least a one point was so low as to raise the question of whether it would be viable to purchase).
Hopefully the methodologies for coming up with the different alternative estimates for the production margin are clear.
As for the remainder of the data, I continue to refine what I track in the hopes of developing more accurate correlations to the actual margins reported by PEIX. I continue to add/drop different data as the value becomes apparent (or not). If you find value in it, great. If not, you're free to ignore it.
Unfortunately I don't know how to link a PDF directly to this post. Fortunately, I am able to make it available through the PEIX board on IV, as I have file storage capacity there. To access the file you'll have to look at my post over there.
