US Ethanol Prices Experience Downward Shift Due to Domestic Inventory Build-up

Ethanol prices in the North American market have changed their gear from the previous month's bullish trend towards a downward direction due to a stockpile of domestic Ethanol inventory. According to the EIA report released on October 12, US production of Ethanol has fallen, though the percentage has remained less than one.

On a quarterly basis, fuel Ethanol production averaged 1 million barrels per day during the first and second quarters and increased to 1.03 million barrels in the 3rd quarter. Moreover, The US Energy Information Administration maintained its forecast for 2023 and 2024 fuel Ethanol production in its latest Short-term Energy Outlook, released October 11. The forecast for fuel Ethanol blending has been revised. Ethanol on October 6 has been reported at a price of USD 830 per metric ton, FOB Texas.

Exports of fuel Ethanol averaged 120,000 barrels per day the week ending October 6, down 2,000 barrels per day when compared to 122,000 barrels per day of exports reported for the previous week. According to reports, one of the major importing markets, China currently has 22 first-generation Ethanol plants, and the capacity utilization has been expected to increase to 49 percent this year.

The demand for US corn-based Ethanol to produce Ethyl Tert-Butyl Ether (ETBE) from Japan has not shown any steady growth in the September quarter. Furthermore, one of the important trading partners, India, has been putting efforts to achieve 20 percent Ethanol blending with petrol, as said by Commerce Secretary Sunil Barthwal during the release of trade data.

EIA report released on October 10 on weekly Ethanol plant production has revealed that fuel Ethanol production has increased on the East Coast by 4,000 barrels per day on a weekly basis. Ethanol production on the West Coast has remained unchanged and declined by 3000 barrels per day in the Gulf Coast.

In a recent report released on US crop production by USDA's National Agricultural Statistics Service on October 12, the estimated corn production is expected to reach 15.1 billion bushels in 2023, a little down than the September forecast; however, it is 10 percent up compared to last year production.

Corn yields have been expected to reach 173 bushels, on average, per harvested acre, down 0.4 bushels from the previous year. Based on situations as of Oct.1, predicted harvesting for corn has been 87.1 million acres, maintained the September forecast, while 10% up from last year.

US Consumer prices increased in September amid higher costs for rent and gasoline, though inflation has been slowing, supporting financial market expectations that the Federal Reserve would not raise interest rates next month. The consumer price index increased by 0.4% last month, according to data provided by the Labor Department. In the 12 months through September, the CPI has advanced 3.7% after rising by the same margin in August. The producer prices have been increased by 0.5% in September, lifted by higher gasoline and food prices, though underlying inflation pressures at the factory gate have continued to abate.