Ethanol Production Comments
- Ethanol production for the week ended July 10 showed a modest increase of 17,000 barrels per day to 931,000 barrels (274 million gallons/week).
- Production was down 12.7% versus 2019, the same as the previous week.
- The two weeks prior were down 16.7% from last year.
- It is estimated production will need to run roughly 4.7% below last year over the final seven full weeks of the 2019/20 marketing year to meet the current USDA corn usage forecast of 4,850 million bushels.
- The recovery in gasoline demand has slowed to 8.648 million barrels per day, down 6.1% from last year.
- Gasoline demand over the last four weeks has been very steady, ranging from 8.561-8.766 million barrels per day.
FBN’s Take On What It Means: Over the last three weeks, the recovery pace in ethanol production has slowed dramatically compared to the surge in the recovery which started in late April. The resurgence in coronavirus cases across many large population states may begin to negatively impact any further recovery in gasoline demand. The ongoing recovery in ethanol production increases needed corn demand, but it continues to fall behind last year. There is some concern USDA may lower its 2019/20 corn usage for ethanol forecast, which was just lowered in the July 10 report by another 50 million bushels.
China Pork Production Lower
- China's pork production fell for the seventh consecutive quarter in April-June, still suffering the effects of the African swine fever outbreak.
- Second quarter pork output decreased 4.7% compared with the same period a year ago to 9.6 million tonnes.
- The National Bureau of Statistics reported a 19% drop for the first six months of the year.
- China’s pig herd was down 2.2% from last year to 334 million head, but was up from 321 million at the end of March.
- The sow herd as of the end of June was 36.3 million head, up 5.4% year on year, and up 7.3% from 33.8 million head at the end of March.
FBN’s Take On What It Means: The report highlights the huge task China still faces in rebuilding its hog herd since African swine fever swept through the country at the end of 2018, and some analysts estimate the herd shrank by as much as 60%. Pork output should recover in due course with the sow herd growing, which would continue to support soybean demand, but it is contingent on the disease staying under control.
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