Just when you think that ethanol stocks are moving in one direction, they are quickly and abruptly adjusted in the opposite direction.
The latest version of the inventory yo-yo has been seen in ethanol stock levels as measured by the EIA. Total inventory levels for ethanol at the end of last week -- granted, it was Thanksgiving week -- was listed at 770.6 million gallons.
This drop of 24.3 million gallon, or 3%, still puts total inventory levels nearly 8% over year-ago inventory levels. Production of ethanol slowed through the Thanksgiving holiday week, with total production at 33.7 million gallons per day. This is a 294,000 gallon-per-day reduction, from week-ago levels.
Overall demand for blending remained stable during the last two weeks. The challenge in store for the ethanol market is that incremental changes in ethanol production will not create a significant shift in a short period of time for ethanol inventories. Any supply glut in the market is going to have to be managed by a combination of lower production, as well as increased demand, over an extended period of time.
Rick Kment can be reached at email@example.com
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