Record Drop In Ethanol Production
- Due to the historic cold snap, ethanol production in the US dropped the most on record since EIA began reporting weekly data in June 2010.
- Some plants slowed or temporarily stopped operations to conserve energy as natural gas prices surged, while others lost electricity.
- Production fell 28% from last week to 658,000 barrels per day, below the average estimate of 819,000.
- Last week's ethanol production was down nearly 38% from last year's 1.054 billion barrels per day, and the lowest since last May.
- Estimated corn usage for ethanol production was 38 million bushels less than last year.
- Ethanol stocks also declined sharply to 957 million gallons from 1.020 billion gallons.
- Gasoline demand also declined to 7.207 million barrels per day from 8.407 million last week, and 20% lower than last year.
FBN’s Take On What It Means: It could be another week before most plants are back up to production levels from before the extreme cold hit. This setback is not seen as lasting long enough to change corn usage estimates for the season. Ethanol producers will likely try to run more to rebuild stocks over the next 4-6 weeks before warmer weather is expected to improve driving demand.
Weekly Export Sales Disappointing
- Corn sales last week were 17.8 million bushels, below market expectations of 20-50 million.
- However, total commitments are already at 2,305 million bushels, 90% of the USDA's 2,600 million bushel export projection.
- Soybean sales also fell below the range of expectations at 6.2 million bushels.
- Wheat sales were a marketing-year low of 6.2 million bushels, down 58 percent from the previous week
- Upland cotton sales of 247,800 running bales were up noticeably from 119,500 the previous week.
FBN’s Take On What It Means: Export sales were weak across the board (except for cotton) as China was essentially absent due to their week long Lunar New Year holiday, and cold weather may have also played a part. However China can be expected to return to the market at some point as they plan to have their hog herd back up to pre swine fever levels by June.
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