The Energy Information Administration (EIA) has released its most recent ethanol production and ending stocks data (for the month of June). The EIA has released its month of June ethanol production estimate at 17.5 million barrels versus a previous record 18.5 million barrels for the month of May. The 17.5 million barrels of June 2008 production represents a decrease of 5.5% below May 2008 production, but an increase of 38.8% in production versus June of 2007. The June 2008 production missed a target of a 19.1 million barrels needed to be produced in order to maintain the pace required to meet USDA's target for corn use in 2007/08 of 3 billion bushels.
More news from the EIA is that June ethanol ending stocks level had an increase to a level of 12.3 million barrels versus 12 million barrels in May. One year ago for the month of June ethanol ending stocks were estimated to be 9.1 million barrels. This suggests a year on year stock buildup of 35%.
Conclusion: decreasing production and increasing stocks are viewed as bearish for the corn used for ethanol production. Allendale's research suggests with two months remaining in the 2007/08 marketing year, USDA needs to trim 21 million bushels off its expectations of 3 billion bushels to a level of 2.979 billion bushels.
Looking Forward: of the most recent nine years, June to July ethanol production has increased eight years. With regards to end stocks of the most recent nine years, five of the years had stocks increase.
Need to See: Allendale Internet subscribers are able to view the most recent ethanol production, ending stocks and profitability projections within our web site via the "Special Reports" toggle on the left hand column. Allendale subscribers via DTN and or Farm Data may either call 800 551 4626 or e mail us at
research@allendale-inc.com/ to request a copy of these reports.
What are your thoughts as to the present production and profitability for ethanol? Is there sufficient reasoning to believe the USDA will hit its mark of 3 billion bushels of corn used for the 2007/08 marketing year? 800 551 4626.
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