Summary: US ethanol production was down nearly 2% following a 5% increase last week. Despite the drop in production, ethanol stocks rose slightly more than half-a-percent. It is estimated that blender demand was up more than 2%. The futures-based producer margin touched the “break-even” a week or two back but then retreated. However, some measures of “cash-based” producer margins indicate that returns are above break-even. Blender margins improved but remain low. The spread between Brazilian and US ethanol prices remains well below a year ago and is the lowest (for this time of year) in over 3 years, indicating that US ethanol is losing it price competitiveness relative to Brazilian ethanol. In the Dec WASDE, USDA lowered their projection for corn grind by 50 Mil Bu to 5,600 Mil Bu. We believe that ethanol grind could be 25-50 Mil Bu smaller still.
US ethanol production through the week ending last Friday totaled 303 million gallons vs 309 the previous week and is down 3% from a year ago.
Ethanol stocks last week totaled 987 million gallons, up 6 million from the previous week but down 1% from last year.
Gasoline stocks last week totaled 260 million barrels, up 4 million from the previous week and up 6% from last year.
US crude inventories were 445 million barrels, up 8 million from a week ago and up 8% from last year.
The futures-based ethanol crush margin is displayed above.
The futures-based blenders’ margin is displayed above.
The spread between Brazilian and US ethanol FOB prices was lower this past week, and is below what it was at this time in each of the last three years.