Ethanol Production

Ethanol Production

Production: 1.093 mb/day
Weekly Total: 7.651 mil bbl
Stocks: 23.928 mil bbl
Corn Used: 108.86 vs 97.56 needed

Analysis 

Stocks drew 762,000 barrels to 23.928 million, the lowest level since January 2. Implied demand jumped to 8.413 million barrels on the week, the strongest print since late March. Production eased to 1.093 mb/day but still set a new seasonal high for this week of the year.

The stocks number is the one worth watching. After running above year ago levels for most of the spring, this week’s print slipped 0.1% below last year for the first time. The five year average for this week is 22.995 million, so we are still above that, but the direction has shifted. Blender inputs held above 920 kb/d and gasoline product supplied came in at 9.131M b/d last week, so the demand side is pulling.

Corn settled 7/2 at 441.50, sitting just above the 200 day near 441 and the 20 day at 426, with the RSI at 70.4 pushing into overbought territory after the bounce off the June lows. Ethanol last traded at $1.955 on 6/30, holding above its 200 day near $1.92, keeping the crush margin around $1.06/bu and the discount to RBOB near $2.95 at 34%. A close in corn above the 50 day at 450 opens the door to a retest of the May highs near 460, while a failure to hold 441 puts the 430 area back in play. We want to see stocks draw again next week before calling this a trend.