EIA Releases Largest Ethanol Stocks on Record
- Ethanol stocks in the week March 27 were 1.080 billion gallons vs 1.014 billion last week. These are the largest ethanol stocks on record and the largest weekly increase since the inception of weekly data in 2010.
- Ethanol production was 840 kbd vs 1,005 kbd in the previous week and 16% below last year. This is the lowest weekly run rate since 2011.
- On an annualized corn grind rate, weekly production translated to 4.500 billion bushels
- Production is averaging 5.390 billion bushels so far this marketing year.
FBN’s Take On What It Means: We believe the USDA likely reduces their corn use for ethanol estimate from 5.425 billion bushels in the April report. The news has underlined lost energy demand and closing ethanol facilities, and there does not appear to be a short-term resolution to this problem. Increased feed usage and exports will help offset some of the shortfall, but weekly run rates are expected to stay low into August which will be a negative for US producers.
February Industry Soy Crush Reported at New Record
- NASS pegged February soy crush at 181.6 million bushels (mbu) after NOPA crush was reported at 166.3 mbu mid month.
- February crush was 162.8 mbu last year and 2 years ago was the previous record at 165 mbu.
- Either NOPA crush was under reported by potentially 4 - 5 mbu or, it’s likely industry crush was over reported as the crush difference is too large for what non-NOPA crush capacity is available.
- Cumulative crush is now up 18.7 mbu over last year, while USDA is projecting 2019/20 crush to only be up 13 mbu.
- USDA is likely understating 2019/20 crush by 40 – 50 mbu.
FBN’s Take On What It Means: Elevated crush demand is in turn supportive for beans which is positive. FBN believes a sharp revision is needed on the next USDA report with larger crush and increased demand for both exports and domestic use. February may be the peak per day crush of the crop year, but crush rates will remain record large each month for the balance of the crop year due to crush expansions and an ongoing need for meal export stocks that could extend through at least part of May.
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