U.S. ethanol production earlier this month fell to the lowest levels in over three years, while a tighter grain supply outlook signaled higher corn costs, CME Group said in a report.
Market focus in early January shifted to corn prices, which climbed to six-week highs after the Agriculture Department cut its forecast for domestic stockpiles, with inventories at the end of summer expected to be the smallest in 17 years.
“Luckily for U.S. ethanol producers, ethanol prices more than kept pace with the corn rally, thanks in part to news of a drop in U.S. ethanol production,” CME Group said in its bi-weekly Ethanol Outlook Report January 22.
During the week ended January 11, nationwide ethanol production averaged 784,000 barrels a day, down 5.1% from the previous week and down 17% from a year earlier, according to Energy Department data. Nationwide ethanol inventories totaled 20.36 million barrels, up 2.6% from a week earlier and up 4.2% from a year earlier.
In futures trading, CBOT Denatured Fuel Ethanol for February delivery rose 1.8 cents to $2.393 a gallon in early trading January 22. February futures earlier in the session touched $2.395, the highest price since December 7.
Click here for more of the CME Group’s bi-weekly Ethanol Outlook Report.
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