-Ethanol production rebounds modestly – keeps up with corn demand “needed” pace
-Ethanol stocks rise again – reclaim same-week record level
U.S. ethanol production, for the week ended 12/18/20, rebounded to 976k barrels/day (287 million gallons/week) from 957k bpd (281 mil gal/week) the week prior and held steady at a 10% year-over-year reduction relative to last year’s 1.083 million bpd (318 mil gal/week) same-week production, as the previous week’s production was also down 10% YOY. However, recent-week production rates reflect a slippage from the 6.8% average year-over-year decline experienced during the 8-week period from mid-October through early December. More importantly, though, this week’s 976k bpd production pace was still above the roughly 958k bpd (282 mil gal/week) average we estimate is needed over the remainder of the marketing year in order to reach the USDA’s 5.050 billion bushel corn for ethanol usage estimate. In fact, ethanol production has met/exceeded the average “needed” pace in each of the last eight weeks so we see no reason to question the USDA’s annual estimate – for now.
U.S. ethanol stocks rose again last week, albeit slightly, to 973 million gallons (23.169 million barrels) from 964 mil gallons (22.950 mil barrels) the week prior, with the 9 million gallon increase being the smallest stocks rise in five weeks. However, the 125 million gallon jump in stocks over the last five weeks is one of the largest increases for that period of time on record. Additionally, the surge of late allowed ethanol stocks to reclaim the record on a same-week basis in surpassing 2018’s 972 million gallons – an impressive feat after being the lowest in four years only five weeks ago. U.S. gasoline demand bounced marginally last week to 8.022 mbpd from 7.975 mbpd the week prior, but was still 13.8% lower than last year’s same-week demand of 9.303 mbpd. Over the last three weeks, gasoline demand averaged 14.5% below year ago levels after being down 10.4%, on average, over the previous 8-week period. Implied weekly ethanol off-take over has been down 13% on average over the last four weeks.
