Ethanol producers are seen cutting output in August, holding out for lower corn prices as the new crop is harvested this fall, according to Brandon Marshall, analyst for Northstar Commodity in Minneapolis, Minn.
"Ethanol plants are at a point where they will shut down in August for routine maintenance because the cost for corn is at a fairly substantial level," Marshall said. He said profit margins dropped to 6 cents per gallon last week compared to 20 cents gallon a month ago.
"Profit margins should continue to improve, but today's report is on the negative side toward production," he added.
The Energy Information Administration today reported the third consecutive weekly increase in domestic ethanol supply through July 19, which increased to 19.592 million bbl better than three-month high.
Meanwhile, U.S. ethanol production declined for the third straight week, sliding 22,000 bpd, or 2.7% to 850,000 bpd last week -- a 2-1/2 month low.
Myke Feinman can be reached at firstname.lastname@example.org
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