-Ethanol production dips to 2nd lowest of last 31 weeks
-Ethanol stocks tick higher
U.S. ethanol production, for the week ended 9/24/21, declined to 914k barrels/day (269 million gallons/week) from 926k bpd (272 mil gal/week) the week prior and was the 2nd lowest production level of the last 31 weeks. Thanks to a solid decline in ethanol production this week last year, production was 3.7% above year ago levels, the best year-over-year comparison in six weeks and met the average “needed” production difference in order to reach the USDA’s 5.200 billion bushel corn for ethanol usage estimate but, again, it was only due to last year’s weak production this week. Over the last six weeks, ethanol production has averaged a mere 0.6% above year ago levels despite gasoline demand running nearly 8% higher than last year during the same period. Over the first four weeks of the 2021/22 corn marketing year, ethanol production has averaged 925k bpd vs the 1.000 million bpd average we estimate will be needed throughout the Oct-Aug period in order to reach the USDA’s corn demand target.
Despite the lower production last week, U.S. ethanol stocks ticked higher 849 million gallons (20.220 mil barrels) from 845 mil gallons (20.111 mil barrels), reflecting a 22 million gallon (2.7%) increase from last year’s same-week stocks of 827 million gallons. While overall stocks levels remain low in historical terms, they tend to increase seasonally from now through March with typically-reduced gasoline demand during the winter season. Implied weekly ethanol “off-take” fell to a 10-week low, resulting in the most-recent 4-week average off-take to decline to an unchanged comparison relative to last year after running solidly above last year of late. While the continued favorable ethanol margin structure and low stocks have been expected to support ethanol production rates of late, that hasn’t necessary been the case as overall production has been somewhat disappointing.
