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US ethanol output, stocks tumble on week: EIA

Houston — US ethanol production averaged 1.042 million b/d in the week that ended November 16, down 25,000 b/d week on week, Energy Information Administration data showed Wednesday.

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Output in the most recent reporting week fell 32,000 b/d, or 2.98%, from the year-ago week. Production was on the low end of market expectations.

The lower output may have been due to output cuts stemming from compressed margins. Most market participants have expected plants to trim output as margins have hovered in negative territory over the past several weeks.

Some destination plants -- those outside the Corn Belt -- have already said they are shutting down. But many are waiting for plants located in the heart of ethanol-producing states to close as a bellwether of balancing supply and demand.

Total stocks shed 723,000 barrels as every region declined. Inventories were 894,000 barrels above the same week last year. The weekly stock decrease was larger than market expectations.

East Coast inventories were 360,000 barrels lower for the largest decrease. Some market participants export out of the East Coast, though it is not as common an origin point as the Gulf Coast. Rail delays over the past months have also delayed some deliveries into New York Harbor, the biggest trading hub in the East Coast.

Region Total Change %Change Change/year
East Coast 7,449,000 -360,000 -4.61 +470,000
Midwest 7,264,000 -211,000 -2.82 -748,000
Gulf Coast 4,555,000 -133,000 -2.84 +769,000
Rocky Mountain 359,000 -9,000 -2.45 +0,000
West Coast 3,164,000 -10,000 -0.32 +404,000
Total 22,791,000 -723,000 -3.07 +894,000

Midwest inventories shed 211,000 barrels for the second-largest decrease. The Midwest is host to the largest number of ethanol plants across all US regions. Open arbitrages to nearly every other region have encouraged market participants to move product out of the Midwest.

The Gulf Coast fell by 133,000 barrels. The Gulf Coast is the most common origin for ethanol exports from the US and the lower inventories were likely exports moving out of the region. Low US prices in recent weeks have encouraged some renewed export interest, sources have said.

The West Coast fell by 10,000 barrels as the EIA reported no imports on the week, down from 37,000 b/d in the previous week. The West Coast is the most common destination for imports as Brazilian sugarcane-based ethanol generates both D5 RINs and Low Carbon Fuel Standard credits under California's LCFS.

The four-week rolling average of the refiner and blender net ethanol input fell 3,000 b/d to 927,000 b/d, while the weekly average rose 2,000 b/d to 928,000 b/d.

The four-week rolling average of gasoline demand, represented by product supplied, fell 34,000 b/d to 9.185 million b/d, while the weekly average slipped 7,000 b/d to 9.185 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, was unchanged at 10.09%.

-- Joshua Pedrick, joshua.pedrick@spglobal.com

-- Edited by Derek Sands, newsdesk@spglobal.com

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