Ethanol production in the U.S. sank 2.2 percent to 900,000 barrels a day last week, according to the Energy Department.
Output slid the most since Feb. 24 to a six-week low, the department said in its weekly report. Stockpiles jumped 2.5 percent, the most since May 18, to 21.2 million barrels.
Ethanol makers are losing about 13 cents on every gallon of the fuel produced, according to data compiled by Bloomberg, assuming one bushel of corn makes at least 2.75 gallons of the fuel.
Valero Energy Corp. (VLO:US), the third-biggest U.S. ethanol producer, idled its 110 million-gallon-a-year plant in Albion, Nebraska, because of the negative margins, Bill Day, a company spokesman said in an e-mail today.
Denatured ethanol for July delivery fell 1.2 cents to $2.10 a gallon at 11:20 a.m. New York time on the Chicago Board of Trade.
Day said that Valero expects to restart the distillery prior to the September corn harvest.
“At this point Albion is the only plant among Valero Renewables’ 10 ethanol plants that has halted production, but we continue to closely monitor market conditions” throughout the system, he said.
Production of conventional gasoline blended with ethanol slumped 2.7 percent to 5.36 million barrels a day from a record the previous week, the department said.
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