U.S. ethanol production levels could continue fall
An ag economist says U.S. ethanol production levels will likely drop in the near-term.
The University of Missouri’s Ben Brown said there’s ‘softness’ in the ethanol market because of higher stocks, increased global production and low export volumes.
“My tone for ethanol is yes, while we’re seeing some softness, we’ve still got some decent profit margins for these ethanol plants to keep maintaining a solid production,” Brown said. “It just might be at the levels we’ve witnessed the last two months.”
He said this week’s ethanol production report – through the U.S. Energy Information Administration – rose stocks, further pushing down its price.
“The fact that we increased stocks while decreasing production is maybe a little bit of a concern because it signals that we’re maybe not driving as much right now,” he said. “That could be, possibly, from the Omicron variant, it could be that it’s in the winter months here and we’re, largely, staying home.”
Brown said as gas prices fall, global production will rise, further limiting export demand.