Ethanol Production Rebounds
Production was still 6.3% below same week last year
Ukraine Corn Crop Lower
- APK-Inform lowered its forecast for this year’s Ukrainian corn crop to 33.8 million tonnes from 34.8 million previously.
- The latest projection below the USDA’s last official estimate of 36.5 million tonnes versu 35.9 million last year.
- Ukraine’s ag ministry’s latest official forecast is 33 million tonnes, while other industry projections are as low as 30 million.
- According to the ag ministry, Ukraine’s corn harvest is now 56% complete, up from 40% last week.
- The average yield for the season to date is near 4.65 tonnes per hectare compared to 6.47 tonnes per hectare last year.
- Ukrainian corn prices continue to surge, with prices jumping $18-$25 per tonne in the last week to near $240 per tonne.
FBN’s Take On What It Means : Due to shrinking crop projections and reportedly strong demand, prices for Ukraine corn are expected to remain elevated. Ukraine usually exports between 3-4 million tonnes each month from November through May, and it’s likely a portion of that demand will be pushed to other origins, especially the US.
Ethanol Production Rebounds
- US ethanol production, for the week ended October 23, rebounded to 941,000 barrels per day from 913,000 last week.
- Production was still 6.3% below the same week last year which is close to the average shortfall over the last eight weeks.
- Production needs to average near 6.3% above last year for the rest of the season to reach USDA's 5,050 million bushel corn usage forecast.
- Ethanol stocks last week fell to the lowest since the end of 2016 at 823 million gallons.
- Last week's gasoline demand was 12.7% below year ago levels.
FBN’s Take On What It Means: Ethanol production over the last two months has averaged 6.3% below last year, an improvement from the 10.5% average decline during the previous two months, but still far from the increase needed to meet projections. With the resurgence of the coronavirus hitting at the same time as gasoline demand decreases seasonally, there is a risk that ethanol demand, and therefore production, could also decline in coming months. This may offset some of the increased corn export demand and buffer further price increases.
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