U.S. Ethanol Output Falls To Record Low

U.S. ethanol production fell to a record low late-July, in the sixth straight week of declines, as surging corn prices and tight supplies of the grain squeezed margins at biofuel refineries, government data released on July 24 showed.

Ethanol production fell 6,000 barrels to 796,000 barrels per day in the week ending July 20, the lowest weekly total since the U.S. Energy Information Administration began tracking the data two years ago. It was the second consecutive week that production hit the lowest total on record.

However, the 0.7 percent decline in production was the smallest drop in more than a month while stocks of the fuel fell 551,000 barrels to 19.01 million barrels, the data showed.

Chicago Board of Trade corn futures hit an all-time high of $8.28-3/4 per bushel on the final day of the reporting period as the most expansive U.S. drought in five decades reduced yields of the developing crop.

At least three U.S. plants are idled until profit margins improve. Scorching temperatures in much of the United States have also led some ethanol plants to slow down production, as the refineries run less efficiently in hot weather.

Denatured ethanol for August delivery rose 11.3 cents, or 4.4 percent, to $2.669 a gallon on the Chicago Board of Trade, the highest settlement price since November 16. The futures have gained twenty-one percent this year.

Valero Energy Corp., the third-biggest U.S. ethanol producer, shut output last month at its plants in Linden, IN, and Albion, NE, citing "economic reasons." Nedak Ethanol LLC said June 15 that it temporarily suspended production at its Atkinson, NE, mill because of poor margins.

Green Plains Renewable Energy Inc., the fourth-biggest U.S. ethanol producer, slowed output at two of its "smaller plants" by thirty percent in February according to Jim Stark, a company spokesman.

Damask said some producers are in the market to buy the fuel in order to satisfy customer commitments and replace supply after tempering output. "Some of the producers are out here buying to get stuff that they already sold," Damask said.

Corn for December delivery surged 32.25 cents, or 4.4 percent, to close at $7.725 a bushel in Chicago. Earlier, the futures reached $7.78, the highest price for a most-active contract since August 29. One bushel makes at least 2.75 gallons of ethanol.

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