Ethanol inventory levels moved lower at the end of last week, falling by 27.7 million gallons of ethanol. This put the total ethanol stocks on hand for domestic just over 808 million gallons as of last Friday. Even with the latest pull down in ethanol numbers, there is 10.9%, or 79.8 million gallons, more ethanol on stock in the system now than there was one year ago. Even with the pullback in production levels from year-ago levels, the sluggish demand for gasoline through the first nine months of the year has been unable to clear overall ethanol stockpiles. This could create an interesting situation as the seasonal trend for both ethanol and gasoline typically declines through the last few months of the year. Ethanol production also slowed due to the higher prices for corn and lower ethanol prices and weak processing margins. But the 1-million-gallon-per-day loss in production does very little to absorb the current surplus of product on the market. Total ethanol production is running nearly 4% under year-ago levels, but if demand does not start to pick up over the coming weeks and months, even this pullback in production is not going to be enough to keep market prices profitable to produce.
Rick Kment can be reached at firstname.lastname@example.org
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