Ethanol Blog

Ethanol stocks increased at the end of last week according to the latest EIA weekly report. This comes after inventory levels had fallen for each of the previous eight weeks.

Total ethanol stocks fell 4.2 million gallons last week to a total of 735 million gallons on hand across the nation. This is still more than 9% lower or 214 million gallons less than inventory levels of ethanol at this time a year ago.

The overall draw-down of stocks puts the emphasis on production losses during the last several months, but also early spring demand for gasoline and ethanol. The challenge now seen in the ethanol market is that ethanol production is starting to increases through the late spring, and overall gasoline demand remains sluggish even compared to a lackluster 2012 spring and summer season.

So even though supplies are tighter than year-ago levels, there are serious questions about upcoming demand for both ethanol and gasoline through the typical driving season that cannot yet be answered. So far, this drawdown is good news for the ethanol market, but there are a lot of time and market movements still left, and the ethanol industry and market may not be out of the woods just yet.

Rick Kment can be reached at rick.kment@telventdtn.com