Ethanol production for the second week of September increased by 714,000 gallons per day or 2% over the prior week with a total average production level listed at 35 million gallons per day. This is still under year ago production levels, but the pullback in corn prices is narrowing that gap as ethanol producers are focusing on lower cost of production and ability to maximize margin levels before ethanol prices continue to move significantly lower. Ethanol inventory levels gained for the second week in a row with a total of 811.6 million gallons on hand at the end of last week. This is a 15.6 million gallon increase or 2% over the week prior, and a whopping 13.1% increase over year ago levels. Even though overall demand for ethanol improved last week, inventory levels outpaced production levels by 10.6 million gallons for the week. This indicates that, even with the elevated corn prices, overall ethanol production continues to remain strong. The additional softness in the corn prices has started to create pressure in ethanol prices, which could create uncertainty about any future buildup in supplies. This could create moderate uncertainty through much of the complex over the next couple months, despite the still tight corn supply levels.
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