US DATA: EIA says ethanol production dips to 996,000 b/d, lowest since October

11.01.2018

US ethanol production averaged 996,000 b/d in the week that ended January 5, down 36,000 b/d from the prior week, Energy Information Administration data showed Wednesday.

Compared with the same week last year, production was 36,000 b/d, or 3.49% lower. Production was on the lower end of market expectations, and was the lowest since the week that ended October 6, when it was 967,000 b/d.

Unseasonably cold weather, particularly across the Midwest and Northeast, made natural gas very expensive at the beginning of the year, which impacted plant costs and ethanol margins.

The simple crush margin, calculated by dividing the cost of corn per bushel by 2.8, the number of gallons of ethanol that a bushel of corn can produce, was negative Monday at minus 0.27 cent/gal but rebounded to 1.40 cents/gal Tuesday.

Total stocks rose over the week, extending the gains seen the previous week. Inventories increased 100,000 barrels to 22.719 million barrels. Total inventories were 2.610 million barrels above last year's level.

The Midwest saw the largest stock level decrease, falling 414,000 barrels to 7.947 million barrels, 943,000 barrels above the same week last year. The Midwest hosts most of the ethanol plants in the US and Kinder Morgan's Argo, Illinois, terminal.

The East Coast saw a 195,000-barrel increase to 7.208 million barrels and the Gulf Coast gained 323,000 barrels to 4.652 million barrels.

The West Coast increased 6,000 barrels as the EIA reported no weekly ethanol imports for a fifth consecutive week.

Blending demand also fell with market sources pointing to the cold weather and New Year holiday as the main reasons.

The four-week rolling average of the refiner and blender net ethanol input dropped 30,000 b/d to 877,000 b/d while the weekly average fell 60,000 b/d, or 7.02%, to 795,000 b/d.

The four-week rolling average of gasoline demand, represented by product supplied, dropped 69,000 b/d to 9.094 million b/d, while the weekly average rose 164,000 b/d to 8.814 million b/d.


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