Posted on 11/3/2021 10:00:47 AM by Randy Mittelstaedt
-Ethanol production ticks higher – sits just below all-time record
-Ethanol stocks rise modestly, but hit 5-week high
U.S. ethanol production, in the week ended 10/29/21, ticked minimally higher to 1.107 million barrels/day (325 million gallons/week) from 1.106 mbpd the week prior, inching to just below the all-time weekly production record of 1.108 mbpd the week of 12/01/2017. More importantly, last week’s production was a very strong 15.2% above last year’s same-week 961k bpd (283 mil gal/week), with the most-recent 3-week period averaging +17.6% relative to last year. Based on the USDA’s current 5.200 billion bushel corn for ethanol usage projection, we estimate ethanol production would need to average roughly 1.002 mbpd during November-August, a 3.1% increase from last year. While the very strong production pace of late is unlikely to be maintained over the entirety of 2021/22, we do feel overall ethanol dynamics are solid enough to prompt USDA to raise their corn for ethanol usage estimate in the November 9 WASDE report. Gasoline demand remains quite strong, with this week’s 9.504 mbpd rising from the previous week’s 9.323 mbpd and reflecting a 14.0% year-over-year same-week increase, while averaging +13.1% over the last three weeks and +9.6% over the last nine weeks (2021/22 corn marketing year so far). 2021 calendar year gasoline demand is averaging +9.3% relative to last year according to the EIA’s weekly data.
U.S. ethanol stocks rose modestly last week to 845 million gallons (20.129 million barrels) from 837 million gallons (19.925 mil barrels) the week prior and, while the 8 million gallon increase was hardly noteworthy, the bump higher put stocks at a 5-week high and 2.3% (19 million gallons) above year ago stocks, the largest difference in five weeks. Overall ethanol stocks, though, remain on the low side of historical levels, below those of 2019, 2018 and 2017 but a bit above stocks in 2016 and 2020. Based on the combination of this week’s production and stocks data, implied ethanol “off-take” last week was 7.545 mbpd vs 7.897 mbpd the week prior, with the most-recent 4-week average up a very strong 15.0% from the same period last year.
