US ethanol production falls below million b/d, stock levels climb again
Weekly US ethanol production has dipped below a million barrels a day for the first time in three months, as the US driving season comes to an end and feedstock gas prices rise, data from the US Energy Information Administration showed Wednesday.
At 996,000 barrels, production fell by 37,000 barrels per day in the week ending January 5 versus the previous week, the second consecutive decline since the biggest week-on-week production seen over the Christmas period.
Stock levels have also increased, rising 100,000 barrels to 22.7 million barrels, in a sign that the US has no shortage of ethanol even with the curtailing of production.
Stocks are at their highest level since pre-driving season stocks hit 23.4 million barrels on May 12.
Production has declined by 95,000 barrels per day since the week ending December 22, cutting an outlet that has soaked up a substantial portion of US corn production in recent months as the industry posted a series of record high production figures.
However, as winter weather has closed in and with ethanol prices waning, margins have come under pressure.
Alongside that, US drivers have faced difficult driving conditions and producers have seen some of their costs rise as heating demand supported gas prices.
However, with storms continuing to close in on the Midwest, there are signs that producers are looking to secure corn supplies before the storm front arrives, providing some support to domestic corn prices.
“They just don’t want to run out of corn because trucks can move or slow down,” one trading source said, adding that most plants have limited storage capacity.