US ethanol production tops 1.1 mil b/d as trade fears glut

US ethanol production topped 1.1 million barrels a day for the first time, while stock levels rose by half a million barrels, data released by the US Energy Information Administration for the week ending December 1 showed this week.

While production of 1,108,000 b/d is supportive for corn prices – corn is the main feedstock for the ethanol industry – industry sources voiced concern that stocks are reaching historically high levels, production margins are under pressure and the peak demand period is behind the US driver.

The Midwest alone produced over a million b/d – a level more typically in line with total US production – as the region looks to place a substantial corn harvest.

Stocks also lurched higher, reaching 22.5 million barrels to a level that has not been seen since May 26, just ahead of the key US driving season, EIA data shows.

“Ethanol margins are precarious, especially in the first quarter… stocks are off the chart,” one market source said Monday, with both portents of potential demand destruction for corn.