At a time when announcement of idled plants and lower overall ethanol production continue to be weekly events, or so it seems, the announcement that overall ethanol production is expected to stabilize during the near future and grow through the last half of 2013 seems like a long-term projection, rather than short-term.
The total average production level of 33.6 million gallons of ethanol produced a day is likely to hold through the middle of the year, with end-of-the-year production expected to increase focusing on the additional availability of corn and potentially lower corn prices.
But in order for this to be attained, it is likely that growing conditions will need to return to a more normal relationship through the spring and summer of 2013.
This raises significant questions if that cannot be answered now, and may likely be unanswered until well into the summer. The other major factor that looms about ethanol production levels is the overall demand of ethanol, which is directly driven by gasoline demand through the summer.
Last year, overall gasoline did not follow the seasonal trends to the extent that was expected and allowed for wide growth in inventory.
This inventory has to be used in the system before production of ethanol can economically come back online. Although the expectation is that overall ethanol production will make up significant ground in the last half of the year, there are still a lot of things that have to fall into place in order for that to happen.
Rick Kment can be reached at email@example.com
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