-Ethanol production rebounds respectfully
-Ethanol stocks post solid decline
U.S. ethanol production, for the week ended 4/12/19, rose to 1.016 million barrels/day (299 million gallons/week) from 1.002 mbpd (295 mil gal/week) the week prior, the third consecutive week of higher production and was even above last year’s same-week production of 1.009 mbpd (297 mil gal/week), the first year-over-year increase in weekly production in nine week. The production rebound this week was respectable, but the year-over-year increase in production this week was influenced more by the 25k bpd decline in last year’s same-week production. Unfortunately, it was another week of production falling well short of the “needed” pace as the 0.7% year-over-year gain in production paled in comparison to the roughly 2.4% gain we estimate will be needed each week, on average, though the end of August if the USDA’s 5.500 billion bushel corn for ethanol usage estimate is to be achieved. In actual production terms, we estimate ethanol production will need to average roughly 1.081 mbpd each week through the end of August, a level appearing essentially impossible to achieve given the fact that all-time record weekly production was 1.108 mbpd and only a total of five weeks since June 2010 saw production of 1.081 mbpd or higher. Ethanol production so far in calendar year 2019 has averaged 2.9% below last year, while even a 2.2% year-over-year average decline in production through the end of August would leave 2018/19 corn for ethanol usage another 100 million bushels below the USDA’s current estimate. Unchanged production from this point forward would equate to a roughly 50 million bushel cut in the USDA’s estimate.
U.S. ethanol stocks posted a solid decline last week, falling to 952 million gallons (22.676 million barrels) from 974 million gallons (23.193 million barrels) the week prior. This week’s 21.7 million gallon stocks decline follows the previous week’s 33.6 million gallon fall and the 19.2 million gallon reduction the week prior. The total 74.4 million gallon stocks decline over the last three weeks combined reflected the largest 3-week stocks drop since early April 2018. However, despite the degree of the decline of late, U.S. ethanol stocks remain a solid 6.2% (56 million gallons) above year ago stocks at this time and are still the 2nd highest on record for the 2nd week of April. Last year saw a similar strong decline in ethanol stocks from early March through mid-April before stabilizing and moving in a choppy fashion during May-July. U.S. gasoline demand pulled back last week from the notable spike higher the week prior to 9.420 mbpd from 9.806 mbpd the previous week and was 4.4% below last year’s same-week demand of 9.857 mbpd, which was a 1-week spike higher, as well. U.S. gasoline demand is running 0.5% below year ago levels, on average, so far in the 2019 calendar year.