A Rollercoaster Ride: Ethanol in 2020
2020 has been a bit of a yo-yo for the ethanol industry.
Just last month, U.S. fuel ethanol production hit a 9-month high, averaging 975,750 barrels per day. Anticipation for holiday travel gave the industry positive vibes through November.
But…there’s always a but: Thanksgiving travel was less than stellar and ethanol use for the holiday week was 13% below the three-year average. Blending activity, also a measure of demand, fell to its lowest level since mid-June.
In the same week, inventory of domestic ethanol hit a 24-week high.
Economics 101: We’re now in a stockpile situation.
Where it’s headed: It’s common for ethanol production to increase throughout the last 3 months of the year. But with a global pandemic rearing its head and winter coming, overall fuel demand may dissolve further. Pressure may be mounting for a spring recovery for the corn-based fuel.