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US ethanol stocks plummet, production rises: EIA

Houston — US ethanol production averaged 1.040 million b/d in the week ended August 2, a 9,000 b/d increase compared with the previous week, while stocks saw a massive draw, Energy Information Administration data showed Wednesday.

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Total stocks fell for the first time in six weeks, shedding 1.351 million barrels or 5.52% week on week to 23.117 million barrels. Inventories were 194,000 barrels higher year on year.

Production was down 60,000 b/d or 5.45% year on year.

Domestic ethanol prices have been under pressure lately as large stocks and falling demand had pushed prices lower. Producers were also squeezed by higher feedstock corn margins, which eroded margins and forced some ethanol plants to close.

The crush margin between Chicago Argo ethanol and CBOT corn futures was assessed at minus 0.79 cent/gal Tuesday. A simple crush margin can be calculated by dividing the cost of corn per bushel by 2.8, the number of gallons of ethanol that a bushel of corn can produce. The resulting number is the cost of corn per gallon of ethanol.

Stocks in the Gulf Coast region had the largest draw, dropping 1.095 million barrels, to 4.921 million barrels, an 18.20% decrease but still 1.92 million barrels higher on the year. The Gulf Coast is the most common origin for ethanol exports from the US. Midwest inventories shed 235,000 barrels or 2.99% week on week to 7.637 million barrels. The Midwest is host to the largest number of ethanol plants in the US.

West Coast stocks decreased by 116,000 barrels to 2.798 million barrels, despite the EIA reporting 36,000 barrels of ethanol imports into the region.

East Coast inventories fell 76,000 barrels or 1.04 % week on week to 7.411 million barrels.

The four-week rolling average of the refiner and blender net ethanol input was stable at 939,000 b/d, while the weekly average fell 14,000 b/d to 945,000 b/d.

The four-week rolling average of gasoline demand, represented by product supplied, dropped by 26,000 b/d to 9.524 million b/d, while the weekly average rose by 92,000 b/d to 9.651 million b/d.

The four-week rolling average of the ethanol blending rate, calculated by dividing the refiner and blender ethanol input by gasoline demand, rose to 9.86% from 9.83%.

US ETHANOL STOCKS, August 2 (barrels)

Total

Change

%Change

Change/year

East Coast

7,411,000

76,000

1.04%

149,000

Midwest

7,637,000

-235,000

-2.99%

-173,000

Gulf Coast

4,921,000

-1,095,000

-18.20%

-192,000

Rocky Mountain

349,000

17,000

5.12%

14,000

West Coast

2,798,000

-116,000

-3.98%

396,000

Total

23,117,000

-1,351,000

-5.52%

194,000

-- Wesley Swift, wesley.swift@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com

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