U.S. ethanol production was at 1.071 million barrels per day for the week ending May 17, 2019 according to the most recent Weekly Ethanol Plant Production report from the Energy Information Administration (EIA). Figure 1 depicts ethanol production by week number in the last four years and up to the week ending May 17, 2019. The average weekly production rate in 2019 leading up to the week ending May 17, 2019 has been 1.018 million barrels, a decrease of approximately two percent, compared to 1.036 million barrels during the same period in 2018.
As seen in Figure 1, the production rate of 1.071 million barrel per day recorded in week ending May 17th has been the highest for last 37 weeks. The previous highest was seen at 1,087 million barrel per day for the week ending August 24, 2018. The fuel ethanol ending stocks increased to 23.4 million barrels for the week ending May 17th, 2019. The ending stocks have been hovering around 22.5 million on average per week for the previous five weeks.
As we approach the seasonally high production rates during summer, ethanol operating margins have become losses according to data published by Iowa State University. The return over operating costs have plunged since the beginning of May 2019 mainly due to significant increase in the net cost of corn in ethanol (corn cost less distillers grain value). The net cost of corn in ethanol production has soared approximately 18 percent since May 1st 2019 due to the increase in cash corn prices in Iowa. Average ethanol price in Iowa has been relatively stable in the range of $1.25 to $1.30 per gallon. The return over operating costs is one indicator of the level potential profitability to ethanol production.
Sampath Jayasinghe, Senior Research Analyst, Decision Innovation Solutions (DIS). DIS is an Iowa-based economic research firm which provides regular farm economic research for the Iowa Farm Bureau Federation.