Stocks dropped this week to the lowest going back to the month of January, ethanol is relatively cheap.
Its over a $1 per gallon cheaper than gasoline which means blenders will be eager to use ethanol as much as possible since it is cheaper.
Unleaded gasoline exploded to the upside going well above the $4 level.
Given the fact that ethanol slots are trading in at about 2.75 per gallon, ethanol is extremely competitive for the blenders and the demand should remain strong for ethanol.
Ethanol production did increase slightly from last week up to 969 thousand barrels per day but still below the level needed to reach USDA’s corn use estimate.
With ethanol prices a $1 per gallon below the price of gasoline that’s going to promote strong use and ethanol margins have improved from where they were the past 3 months.
Ethanol export will likely be strong, and we believe ethanol production will likely increase up to the level that’s needed in the late May-July timeframe.
Stocks are down for the 5th week in a row, still relatively high, but not burdensome at 23.89 million barrels.
With the demand from the blenders expected to be strong, demand from exports expected to be strong, we believe ethanol stocks will continue to decline seasonally and ethanol stocks should be at a very season level as we move into the mid-summer.
Stocks of fuel ethanol has dropped for the second week in a row, this week was a sharp drop to 24.8 million barrels.
There is two pieces of good news, one is we do decline seasonally in the April-June timeframe, and we are declining now, secondly US ethanol has become very competitive on the global market.
We are now 60-70 cents per gallon below Brazilian ethanol and ethanol is 60-70 cents below the price of gasoline. Therefore, we expect stocks of fuel ethanol to continue to trend lower as we move through the Spring into early Summer.
Production was down fractionally from last week at 995 thousand barrels per day, but this isn’t unusual.
If you look at our lines, many of the years previously, we’ve seen a reduction in the late March through early May timeframe when many plants are taking some Spring downtime.
We do suspect that as we move towards May and June-July that our ethanol production will increase seasonally, and we are on track to reach USDA current corn use estimate.
Our year-to-date ethanol production is up 9.7% from a year ago, USDA is estimating that corn use will be up 6.8%.
Unleaded gasoline as I mentioned bounced 12-16 cents today, its still nowhere near the highs posted the week following the Russia invasion of Ukraine but it is up about 18 cents off of the low from last week.
Our stocks fell for the first time in 5 weeks, we dropped to 25.892, that’s still a large level of stocks. Typically, we see stocks declining in the February-May timeframe before stocks find some bottoming action in the May-July timeframe.
Given the fact that US ethanol is cheaper than Brazilian ethanol tells us that our exports of fuel ethanol could be good in April-May, and we would not be surprised to see our stocks of ethanol declining consistently as we move through the next 4-8 weeks.