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EXPERTS DISCUSS WHY ETHANOL PRODUCTION HAS DROPPED SO MUCH
Sep. 29, 2022
by Michelle Rook, AgWeb.com
Ethanol production in the U.S. has slowed the past several weeks and is now at levels not seen since the height of the COVID-19 pandemic. Production, which usually slows in the fall for plant maintenance, has been running below 1 million barrels per day for several weeks. However, for the week ending Sept. 16 it dropped to an 81-week low of 901,000 barrels per day, and this week it fell to 855,000 barrels per day.
Joe Vaclavik with Standard Grain says that is a concern for the market: "It's normal to be weak this time of year but not necessarily this weak. So yes, it's soft demand for ethanol."
Geoff Cooper, Renewable Fuels Association president and CEO, explains, "I think the big reason for that is gasoline demand is down and it's down a lot compared to past years. We're kind of talking levels that we saw during the pandemic."
Some plants also slowed crush waiting for less expensive new-crop corn, which isn't a surprise, Vaclavik says. "The corn situation is tight, that's reflected in the basis, that's not a secret. Cash markets are really, really strong," he says.
Additionally, ethanol prices follow energy prices, which have dropped to the January lows.
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