Ethanol Blog
Ethanol Prices Continue Lower Despite Production Decline
Lower ethanol production at the end of last week led to a light drawdown of stocks. Overall production dropped to levels not seen since spring, with total production of 21.1 million gallons per day. Despite the drop, it is important to remember that this production level is still nearly 7% over a year ago. At the same time, total inventory levels are 19% or 126 million gallons ahead of year ago levels at this point of the year. It is too early to determine if the one week shift lower in production and inventory levels will be able to continue and potentially set the tone of the rest of the year, but ethanol traders are unwilling to step back into the market with steady to higher price levels despite gains in corn market prices. This could continue to show a separation between the relationship between corn prices and ethanol prices. Further break in these price relationships may spark additional uncertainty in both markets.
(CZ)
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