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.
Rick Kment can be reached at firstname.lastname@example.org
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