Summary: US ethanol production was down slightly this past week. More significantly, ethanol stocks dropped 3.3%. It is estimated that blender demand was up about 1%. The futures-based producer margin appears to have stabilized but blender margins slipped to break-even and are the lowest in 16 months. The spread between Brazilian and US ethanol prices remains well below a year ago. In the Dec WASDE, USDA lowered their projection for corn grind by 50 Mil Bu to 5,600 Mil Bu. Gasoline prices have fallen below $2/Gal in many parts of the country. Cheaper gas should lead to an increase in driving and increased gasoline consumption. However, with ethanol producers losing money on each gallon produced there is little incentive to ramp up production.
US ethanol production through the week ending last Friday totaled 306 million gallons vs 308 the previous week.
Ethanol stocks last week totaled 970 million gallons, down 33 million from the previous week but up 5% from last year.
When expressed as a percent of use, ethanol stocks/use are below average.
US motor gasoline inventories are up slightly. As of last Friday, stocks totaled 233 million barrels vs 230 Mil last week and were up 2% from last year.
US crude inventories were 441.4 million barrels, nearly unchanged from a week ago but up 2% 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 unchanged, but is well below wheat it was at this time in each of the last two years.