-Ethanol production rises modestly again
-Ethanol stocks further decline to 14-week low
U.S. ethanol production, for the week ended 9/10/21, rose modestly to 937k barrels/day (275 million gallons/week) from 923k bpd (271 mil gal/week) the week prior with the 14k bpd increase being comparable to the previous week’s 18k bpd increase, as well, after hitting a 26-week low of 905k bpd in the week ended 8/27/21. This week’s production reflected a minor 1.2% increase from year ago same-week production of 926k bpd (272 mil gal/week) after the previous two weeks’ production rates were 2% below year ago levels. However, over the last four weeks, U.S. ethanol production has averaged 0.6% below year ago levels, while we estimate production will need to run at a 3.7% average increase to last year during the 2021/22 corn marketing year in order to reach the USDA’s 5.200 billion bushel corn for ethanol usage estimate.
U.S. ethanol stocks declined for the 7th consecutive week to 840 million gallons (20.010 mil barrels) from 856 mil gallons (20.390 mil barrels) the week prior, with the 16 million gallon decline being in line with the average weekly decline over the previous 6-week period. Given the 114 million gallons stocks drop over the last seven weeks, U.S. ethanol stocks are now only 1% (9 million gallons) larger than year ago stocks at this time, which were the lowest for early September since 2015. U.S. gasoline demand last week took a solid hit, declining to 8.892 mbpd from 9.608 mbpd the week prior, a 14-week low, and compared to the 9.523 mbpd average over the previous four weeks. Accordingly, last week’s demand was up only 4.9% from the previous year vs the 9.0% average increase over the previous four weeks. Implied ethanol “off-take” over the most-recent 4-week period averaged 3.5% above year ago levels. The combination of solid production margins, declining stocks and usage running above year ago levels should support prospects for continued rebounding ethanol production rates in the weeks ahead.