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-Ethanol production rises modestly – hits 4-week high
-Ethanol stocks post first increase in 6 weeks – largest increase in 20 weeks

U.S. ethanol production, for the week ended 4/30/21, rose modestly to 952k barrels/day (280 million gallons/week) from 945k bpd (278 mil gal/week) the week prior and was a 4-week high. As last year’s ethanol production was starting to recover from the initial COVID shock collapse, production this week was still 59% larger than last year’s same-week 598k bpd (176 mil gal/week) rate, but more importantly, was 8.1% below same-week production in 2019, our current measuring metric, exactly in line with our estimation of production needing to run roughly 8.2% below 2019 levels in order to reach the USDA’s 4.975 billion bushel corn for ethanol usage estimate in 2020/21. Over the last four weeks, ethanol production has averaged 8.4% below 2019 levels, supporting the USDA’s current annual ideas. With ethanol margins remaining positive and ethanol stocks historically low (although increasing last week), heading into the summer driving season as the U.S. vaccination rate increases and travel activity likely increases, we expect ethanol production to increase overall in the months ahead to keep up with expected modestly increasing gasoline demand. In terms of actual production levels, we estimate U.S. ethanol production needs to average roughly 967k bpd (284 mil gal/week) through the end of August vs last year’s 858k bpd and 2019’s 1.053 million bpd in order to reach the USDA’s annual corn for ethanol usage estimate.

U.S. ethanol stocks last week increased for the first time in six weeks, while posting the largest single-week increase in 20 weeks, to 858 million gallons (20.440 mil barrels) from 829 million gallons (19.736 mil barrels) the week prior. While the increase was nice to see, overall stocks remain a massive 217 million gallons below last year’s COVID-impacted 1.076 billion gallons and the lowest since 2014 on a same-week basis. U.S. gasoline demand last week was flat at 8.864 mbpd vs 8.877 mbpd the week prior and was 33% higher than last year’s same-week demand of 6.664 mbpd, but 10.2% below 2019’s 9.871 mbpd, the 2nd largest decline relative to 2019 of the last 7 weeks. Over the last four weeks, though, U.S. gasoline demand has averaged 5.6% below 2019 levels. With the increase in stocks last week, implied weekly ethanol off-take hit an 11-week low and pushed the most-recent 4-week average weekly off-take to 9.9% below 2019 levels.

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