Ethanol production rates are missing the mark.

USDA surprised us last week with a 50 million bushel increase for old crop corn for ethanol usage. Now at 5.450 billion bushels, it would be +5.3% from last year's 5.176. There were others in the industry who agreed with this move.

Year to date, September - March, corn for ethanol has been reported at 3.187 billion bushels, +6.8% from last year. Remaining April - August usage would only need to run +3.3% from here on out to meet that newly raised goal. The light concern here is that April ethanol production numbers have not hit that mark. The most recent four weeks have now run -1.3% to +1.3% vs. last year. Today's 1.000 million barrel per day run, covering last week's activity, was +1.3%.

Let's do full disclosure here. Ethanol production efficiency rates are weaker this year. Q1 Sep - Nov corn for ethanol efficiency was -1.0% from the prior year. Q2 Dec - Feb efficiency was -1.6%. If we take the “needed +3.3% corn for ethanol use” and adjust it by 1.6% for lowered efficiency then our “needed ethanol production rate” is +1.7%. The last time we saw that rate was six weeks ago. We're looking at a light 10 to 40 million bushel miss on the balance sheet.

We can't make exact comparisons with ethanol production and gasoline consumption. They are separate, but related issues. However, we can't help but notice recent usage has been poor in seven of the past eight weeks. Only one of those weeks popped to above last year usage.

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