Ethanol Blog

Ethanol Production and Inventory Levels Grow

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol futures fell sharply Wednesday despite moderate end-of-the-day gains in the corn market. This shift lower in the ethanol futures prices has been affected by the latest ethanol data released in the EIA report.

Ethanol production levels through the first week in April grew 5.5% over last week levels with a total daily production of 35.9 million gallons.

This is an increase of 1.9 million gallons over the previous week. The recent pressure in the corn market price during the last three weeks is allowing producers to rebuild production levels. Overall ethanol plant margins have improved significantly due to lower corn prices and tighter ethanol supplies.

After reducing inventory levels significantly over the last two months, overall domestic stocks grew 1.8% or 12.6 million gallons. Total ethanol inventory levels are now listed at 747.6 million gallons. The combination of additional growth and larger inventory could quickly disrupt the support recently seen in ethanol prices. In order to maintain the tight market situations seen the last two weeks, gasoline demand is also going to need to increase significantly through summer.

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Eddy Lahens
4/11/2013 | 10:04 AM CDT
Rick, because demand rises in Spring and Summer, actually the inventory level, measured in ' inventory days' is down to 20 days range. Any demand for export flows right out of the inventory, and then the plants adjust to replenish. So do not be surprised if the inventory number shows a 10-20million delta dip next week ( beginning of next-month accountng for prior month). Second comment, US use close to 33-34mil gallons PER DAY of ethanol. And in Spring-Summer, even more, so an increase of 1.9mil is less than one hour of use... just noise.