Despite Tight Margins, U.S. Ethanol Output Soars

Earlier in the month, U.S. ethanol output soared at its fastest rate in five months, with U.S. corn ethanol producers producing 969,000 barrels per day according to the Energy Information Administration (EIA) despite tight margins.

"We had expected a rise of 1-2%," said Jerrod Kitt, analyst at Linn Group, while rival Chicago broker Futures International forecast a drop of some 4,000 barrels a day, according to Agrimoney. However, the U.S. ethanol industry increased production by 25,000 barrels per day, or 2.6% week on week.

This spike happened just one day after Archer Daniels Midland (ADM) reported a larger-than-expected decline of 78% in operating profits for the third quarter to $40 million, with ADM chief executive, Jose Luciano saying, “We continue to confront very weak industry ethanol margins.”

Data from the EIA also indicates that U.S. ethanol inventories climbed at a historically high pace, by nearly 500,000 barrels to 18.77 million barrels as a result of the uptick in production. But when looking at inventories based on day of usage, these stockpiles are being considered “just adequate, not burdensome,” according to Kitt.