Ethanol Production Higher
Although production rates are showing signs of seasonal increase, recovery has slowed due to weak gasoline demand
Ethanol Production Higher
- U.S. ethanol production, for the week ended October 9, rose to a 5-week high of 937,000 barrels/day from 923,000 the week prior.
- Production is still 3.5% lower than last year, but it’s the narrowest difference since the COVID slowdown.
- Over the last four weeks, ethanol production has averaged 5% below year ago levels.
- The average Corn usage so far in 2020/21 is running at an annualized rate of 4,833 million bushels compared to the USDA projected 5,050 million.
- Ethanol stocks for the week increased to 840 million gallons versus 826 million last week.
- The US imported 7 million gallons of ethanol which is above the 4-week average of almost 4 million gallons.
- Imports of 26 million gallons of ethanol in the marketing year to date would equal nearly 10 million bushels of corn demand.
FBN’s Take On What It Means: Although production rates are showing signs of seasonal increase, the recovery has slowed due to weak gasoline demand. Gasoline demand is currently on pace to use approximately 4,480 million bushels of corn this year, while net exports might account for another 1,200 million gallons. Unless there is a significant increase in demand it will be difficult to reach the USDA projection.
Lower Argentine Wheat Forecast
- Rosario grain exchange cut its forecast for Argentina's 2020/21 wheat crop to 17 million tonnes from 18 million last month.
- The exchange estimates 1.5 million of the total 16 million acres planted could be abandoned due to frost and drought conditions.
- The Buenos Aires Grains Exchange forecasts wheat production at 17.5 million tonnes, down from its early-season estimate of 21 million.
- Rain is forecast to increase next week, but may be too late for areas in the north and west where flowering is underway.
- The Rosario exchange left its corn and soybean forecasts unchanged at 48 and 50 million tonnes respectively.
FBN’s Take On What It Means: Parts of Argentina's Pampas grains belt have been unusually dry over the last eight months and wheat crop conditions have suffered. The country's farmers harvest wheat in December and January and time is running out for winter crops. Lower production in Argentina will reduce global supplies, but are offset by increases for Russia and Australia.
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