Dec 31, 2020

Ethanol Production Down, Stocks Rise

Demand did not pick up as much as expected going into the holidays

Argentina Restricts Corn Exports

  • The major exporter has halted corn exports until March 1.
  • That is when fresh new-crop supplies will be available.
  • Seasonally, there tends to be a decline in Argentina’s monthly corn exports this time of year until March, but the restriction underscores the tight situation for the major feed grain.
  • The reason cited for the halt was to ensure enough domestic supplies for the livestock industries ahead of new-crop supplies.
  • Argentina continues to face economic issues, including high inflation.
  • The recent labor strike that was disrupting soy crush and grain/oilseed exports was resolved earlier this week.

FBN’s Take On What It Means : The move from Argentina aligns with Brazil’s allowing tariff-free corn imports and underscores the tightness of the corn balance sheet for both countries. With prices at the Gulf still competitive, the US will likely be a key beneficiary, and may capture an additional 50 to 70 million bushels of export business.

FBN
FBN

Ethanol Production Down, Stocks Rise

  • Ethanol production in the week ended December 25 was 12% below last year at 934,000 barrels/day versus 967,000 barrels the week before.
  • The average annualized corn usage rate is near 5,000 million bushels, slightly below the USDA forecast of 5,050 million bushels.
  • Ethanol stocks for the week were up 1.4% to 987 million gallons compared to 973 million the previous week.
  • Spot profitability remains solidly negative, and though forward returns improve, they are still estimated to be slightly negative.
  • The basis needed to move corn remains high.
  • Strong distiller grain and corn oil prices have helped offset some of the weakness.

FBN’s Take On What It Means: The coronavirus epidemic continues to weigh on the ethanol market. Demand did not pick up as much as expected going into the holidays, and seasonally drops off in January. Production will likely lag into March and then increase as demand picks up with COVID vaccination efforts.

FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN BR and FBN Market Advisory (NFA ID: 0508695)

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Kevin McNew

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Magazine

Marketwatch: Jan, 17

US Corn Price Idx: ZCPAUS.CM

open: 5.7667
high: 5.8486
low: 5.7266
close: 5.8288

US Soybean Price Idx: ZSPAUS.CM

open: 13.366
high: 13.376
low: 13.2328
close: 13.2696

US Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 7.3061
high: 7.3384
low: 7.2334
close: 7.2454

US Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.0114
high: 7.0566
low: 6.9566
close: 7.0014