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EIA ethanol report for August was that the capacity utilization rate for the ind

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The main interesting item in last week's monthly EIA ethanol report for August was that the capacity utilization rate for the industry hit a new [glow=red,2,300]record high of 98.6%, meaning there is not much room for ethanol producers to boost production over the short-run, which is a supportive factor for ethanol prices.[/glow]

 

USDA tries to defend its recent corn estimates -- The USDA at the annual data users meeting held last Monday in Chicago tried to defend itself regarding its recent big forecast misses.  The USDA in its October 8th report slashed the U.S. corn yield to 155.8 bushels per acre from 162.5 bushels in September, forcing a sharp cut in the corn crop size to 12.664 billion bushels and the ending stocks figure to 902 million bushels from 1.116 billion bushels.  The USDA's report caused a sharp rally in both corn and ethanol prices.  The market suspects that the USDA may cut the corn yield even further in its upcoming November 9th report, which would likely lead to even higher corn and ethanol prices.  The USDA said the problem was that the average weight of corn kernels was substantially below forecasts, largely because of the hot weather that emerged later in the season.  The USDA also said that it thinks it got the 2009/10 ending stocks number right despite the sharp upward revision and that the figure did not accidently include any of the harvest from the new marketing year.

 

Ethanol Market Action --  December CBOT Ethanol futures prices last Friday rallied to a new 2-year high and closed the week up 10.9 cents (+5.1%) at $2.242 per gallon.  Bullish factors included the 3.9% rally in Dec corn prices and the small 0.3% rally in gasoline.

 

Weekly ethanol inventories snap 5-week decline -- Last Wednesday's weekly EIA report was mixed.  Ethanol production in the week ended Oct 22 fell slightly by 0.1% to 880,000 barrels per day from the previous week's record high of 881,000.  However, ethanol inventories rose by 1.7% to 16.310 million barrels, breaking the 5-week string of declines.  Nevertheless, ethanol inventories were still at low levels not seen since last December and were down by 18% from July's record high.

 

The main interesting item in last week's monthly EIA ethanol report for August was that the capacity utilization rate for the industry hit a new record high of 98.6%, meaning there is not much room for ethanol producers to boost production over the short-run, which is a supportive factor for ethanol prices.

 

Ethanol/Gasoline -- November gasoline futures prices last week continued to consolidate in a narrow range below the recent 6-month high and closed the week up 0.54 cents (+0.3%) at $2.0594 per gallon.  Gasoline prices were supported by the slighter lower close in the dollar index last week by 0.3% and by continued strength in the U.S. stock market.  Last week's relative strength in ethanol prices pushed the premium of ethanol prices above gasoline prices up by 10.4 cents to 18.3 cents, although ethanol is still 27 cents cheaper than gasoline after the 45-cent ethanol excise tax subsidy.

 

Ethanol/Corn -- December corn futures prices last week rallied by 3.9 cents and closed just below the recent 2-year high, up 22 cents (+3.9%) at $5.82 per bushel.  Corn prices rallied last week on market expectations that the USDA may further cut the size of the corn crop, thus causing an even tighter supply situation than already exists (i.e., the tightest since 1996/97 with a stocks/use ratio of 6.7%).  The corn crop as of Oct 24 was 83% harvested, or 34 points ahead of the 5-year average of 49%.  The Dec ethanol-corn crush margin last week rose by 3.0 cents to 16.3 cents/gallon.  Including DDG, the Sep corn for ethanol crush margin rose by 3.0 cents to 51.5 cents/gallon.

 

Ethanol Calendar

Nov 3: EIA Weekly Petroleum Status Report

Nov 9: USDA WASDE Crop Supply-Demand

Nov 29: EIA Sep Monthly Ethanol Report

• Mid-Dec: EPA's E15 decision expected for 2001-06 model vehicles.

 

http://www.insidefutures.com/article/183100/CME%20Group%20Ethanol%20Outlook%20Report%20-%20November%2001,%202010.html

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According to the RFA we exported about 30 million gallons of ethanol in August.

 

http://www.ethanolrfa.org/exchange/entry/august-ethanol-exports-up-18-from-july/

 

If ethanol prices, utilization rates and exports were all up in August it must mean that ethanol from Brazil was really expensive at that time. Otherwise they would have captured those export sales.

 

There has been several ethanol plants sold recently or in the process now that will add to capacity as they are brought back into production.

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According to the RFA we exported about 30 million gallons of ethanol in August.

 

http://www.ethanolrfa.org/exchange/entry/august-ethanol-exports-up-18-from-july/

 

If ethanol prices, utilization rates and exports were all up in August it must mean that ethanol from Brazil was really expensive at that time. Otherwise they would have captured those export sales.

 

There has been several ethanol plants sold recently or in the process now that will add to capacity as they are brought back into production.

 

Yeah I was reading that yesterdy and was abit ticked off.. we shouldn't be exporting any ethanol ..once ethanol becomes more expensive than gasoline.. I'd sure like to see some legislation to that effect

 

Agree..the numbers dont tell the whole story becuase of all the idle plants

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The Aventine's "Aurora West" 113 million gallon ethanol plant in Aurora Nebraska is on schedule for its opening this fall for the corn harvest... don't know if they are on schedule or not...  I'm sure that there are others out there as well...

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Pacific Ethanol, Inc., announced on October 18th that it expects to resume operations at its 60-million-gallon-a-year ethanol facility in Stockton, Calif., in December...  more capacity coming online.

 

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&product=/ag/news/renewablefuels/news&vendorReference=0702BACB&paneContentId=35&paneParentId=0

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Yeah I was reading that yesterdy and was abit ticked off.. we shouldn't be exporting any ethanol ..once ethanol becomes more expensive than gasoline.. I'd sure like to see some legislation to that effect

 

Agree..the numbers dont tell the whole story becuase of all the idle plants

 

Production in August was 1.1 billion gallons so 30 million gallons is a really small amount. That would be less than one days ethanol production.

 

The exports are a sign on two things, the high cost of Brazilian ethanol at that time and the fact that ethanol producers were able to produce more than the domestic market could absorb at that time. I wouldn't look to look to crimp their ability to sale excess to other markets because unlike the petroleum refining industry the ethanol industry has shown a willingness to expand to meet new demand. As far as I know the term limited refinery capacity has never been used to describe why ethanol prices are going up but was a perennial excuse for why gasoline prices were going up during the peak driving season.

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in regards to the high price of sugar, and Brazilian ethanol...

 

I read yesterday (didn't keep the link) that some Brazilian producers are going to be adding the ability to process corn into ethanol during their off season where they don't have any sugar to crush...  especially in the more remote interior states.  They have a massive surplus of corn, which needs to be transported (mostly by truck)... and sugar-ethanol plants sitting idle...  sounds like an ideal situation.  They would still be using the bagasse from the sugar crushing to fuel the process, and would be using a lot of the same equipment.  A pretty good way for them to increase ethanol production, and to allow them to keep providing the ethanol for the market year round.  They see a spike in the price of ethanol during the off season, as well as shortages.  Would be good incentive for producers to diversify.

 

If corn prices are down, and sugar is up... you could simply say "no thank you" to sugar, and simply keep running the plant on corn until the price of sugar falls back... would be great for the ethanol industry.

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