Ethanol production in the U.S. fell to a record low after distillers slowed output or shut money- losing plants, a government report showed.
Output dropped 2.8 percent to 770,000 barrels a day, the Energy Information Administration said today. It was the lowest level since the Energy Department’s analytical arm began tracking weekly data in June 2010. Stockpiles gained 2.3 percent to 20.5 million barrels, the most in six weeks.
Ethanol companies across the grain-rich Midwest, including Valero Energy Corp. (VLO:US), Poet LLC, and White Energy Inc., have reduced production and closed plants in the face of record corn prices caused by the worst U.S. drought since the 1930s. Corn is the main ingredient of U.S. ethanol.
Imports plunged to 9,000 barrels a day from 67,000 the previous week. That’s the lowest level since Nov. 16, the report showed. Ethanol-blended gasoline made up 87 percent of the total U.S. gasoline pool last week, down from 88 percent in the week ended Jan. 18.
Denatured ethanol for February delivery rose 2.9 cents, or 1.2 percent, to $2.434 a gallon at 11:09 a.m. New York time on the Chicago Board of Trade, the highest price since Nov. 28. The futures Prices have advanced 11 percent this year and are heading toward the first monthly gain since October.
Corn for March delivery gained 6.5 cents, or 0.9 percent, to $7.36 a bushel in Chicago after touching $7.39, the highest price for a most-active contract since Dec. 7. One bushel makes at least 2.75 gallons of ethanol.
Based on March contracts for corn and ethanol, producers are losing 23 cents on each gallon of the fuel made, unchanged from yesterday, according to data compiled by Bloomberg. The figures exclude the revenue that can be made from the sale of dried distillers’ grains, a byproduct of ethanol production that can be fed to livestock.
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