A Closer Look at the April 29 EIA Report on Ethanol

According to the latest information from the Energy Information Administration (EIA), ethanol production was at 537,000 barrels/day for the week ending April 24, 2020, down from 563,000 barrels/day the previous week and 48 percent below last year’s volume for the same time period.

On an annualized corn grind rate, weekly production translates to 2.820 billion bushels. For context, the last USDA estimate in April for the 2019/20 crop year saw 5.050 billion bushels of corn used for ethanol.

Meanwhile implied ethanol use is on the rise for a second week (see chart below) after experiencing a substantial dip in March. Though still well outside the five-year range, implied use is creeping higher with some stay-at-home restrictions easing and drivers venturing out more.

Ethanol stocks fell to their lowest level (1.106 billion gallons) since April 3, 2020, down from the record high 1.163 billion gallons last week. This stock reduction of 57 million gallons represents the second largest week-over-week stock decline in history.

FBN's take on what it means for the U.S. farmer

Ethanol production has dropped nearly 50 percent since mid-March. Implied usage has started to recover, but ethanol production for the rest of this marketing year hinges on continued recovery of the economy. The damage has been done, however, and even with a modest increase in demand the USDA will still need to lower its usage figure further.

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