Houston, 11 July (Argus) — US ethanol production dropped to a nearly two-year low during the week that ended 6 July and inventories also fell sharply, falling to their lowest level since early January as drought in the midcontinent has lifted corn prices and mangled ethanol producer margins.
Stockpiles of US ethanol were down by nearly 4pc last week as they fell to 19.53mn bl, or lower by 761,000 bl from the previous week. Inventories have not stood this low since the first week of the year, according to the latest weekly figures from the Energy Information Administration (EIA).
The decline came despite a slight uptick in inventories in the midcontinent and Rocky Mountain regions as the east coast shed 377,000 bl to 7.4mn bl, the Gulf coast lost 320,000 bl to 2.8mn bl and the west coast region dropped 158,000 bl to 2.3mn bl on a week-over-week basis. Midcontinent inventories were up 25,000 bl to 6.8mn bl, and Rocky Mountain stocks edged higher by 1,000 bl to 267,000 bl.
Overall ethanol production fell by 36,000 b/d last week to average 821,000 b/d. US production hasn't been this low since the week that ended 23 July 2010, when production stood at 816,000 b/d. The cuts to output last week were led by a 24,000 b/d drop in the key midcontinent producing region to 760,000 b/d. Data broken out for other regions is not yet available, according to the EIA.
Blended inputs of ethanol dropped by 6,000 b/d to 854,000 b/d. The largest drops were seen in the midcontinent and west coast, where inputs dropped by 6,000 b/d to 237,000 b/d and by 3,000 b/d to 145,000 b/d, respectively.
Total production of finished motor gasoline dropped 70,000 b/d to average 9.32mn b/d while ethanol-blended gasoline output was down 100,000 b/d to 8.53mn b/d. Ethanol-blended gasoline made up 91.6pc of the total gasoline pool, down 0.38pt from the previous week.
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