-Ethanol production rebounds solidly
-Ethanol stocks slip lower
U.S. ethanol production, for the week ended 10/01/21, rose solidly to 978k barrels/day (288 million gallons/week) from 914k bpd (269 mil gal/week) the week prior, the highest production in eight weeks and a solid 6.0% above last year’s same-week production of 923k bpd (271 mil gal/week), also the largest year-over-year gain in production in eight weeks. Moreover, last week’s production was the first in seven weeks which met/exceeded our estimate of “needed” ethanol production running roughly 4.5% above year ago levels over the remainder of the 2021/22 marketing year in order to reach the USDA’s 5.200 billion bushel corn for ethanol usage estimate. With the strong ethanol margin structure and continued low level of stocks, there appears to be plenty of incentive for ethanol production rates to continue at a solid clip in the near term.
Despite the strong increase in production last week, U.S. ethanol stocks declined to 837 million gallons (19.931 million barrels) from 849 million gallons (20.220 mil barrels) the week prior, reflecting a decline in stocks to the lowest level in 18 weeks and leaving stocks only 11 million gallons (1.3%) above last year’s 826 million gallons at this time. The combination of higher production and lower stocks implied an uptick in usage, with implied weekly ethanol “off-take” rising to 7.135 mbpd from 6.289 mbpd the week prior (6.698 mbpd prior 4-week average), and reflecting a 3.8% increase from last year over the most-recent 4-week period. U.S. gasoline demand ticked higher last week to 9.427 mbpd from 9.399 mbpd the week prior and a 6.0% increase from year ago same-week demand. Over the last four weeks, U.S. gasoline demand averaged 6.4% above year ago levels.
