Ethanol production eased at the end of last week, according to the latest EIA report released Wednesday morning. Total ethanol production fell 1.3%, or 462,000 gallons per day, compared to the week prior. Total ethanol production averaged 34.6 million gallons a day. This is a 12.2% drop from production levels at the same time last year.
But even with the lower production of ethanol overall ethanol inventory levels continue to grow based on weakness in implied demand for gasoline. This is the measure of net inputs for refiners and blenders. The growing supply of ethanol in the market heading into the end of the year is creating additional concern to a market and industry that is already riddled with poor or negative margins through the majority of the year as well as high production costs associated with corn prices. Total ethanol inventory levels are listed 17.4% over year-ago levels with 841 million gallons of ethanol available for use. Although the holiday season over the next couple of weeks could help to spur additional overall driving demand, it is expected that current inventory levels, if not even larger, will be carried into the New Year. This could continue to put significant pressure on the overall ethanol industry and further weaken plant margins.
Rick Kment can be reached at firstname.lastname@example.org