US ethanol output eases off record pace as summer travels heat up: Braun

Reuters

2 days ago

NAPERVILLE, Illinois, May 30 (Reuters) - Record volumes of U.S. ethanol have been churned out since late last year, largely due to an uptick in exports and steady domestic demand.
But output has slipped from those record levels over the last couple of weeks, coinciding with the ramp-up of the summer driving season.
Luckily, large stockpiles of the corn-based fuel additive can offset some of the easing in output for now.
However, both exports and domestic travel trends will need to be monitored in the coming weeks and months since this is when U.S. motor gasoline demand typically peaks.
Over the four weeks ended May 23, U.S. ethanol production averaged roughly 1.026 million barrels per day. That is the best for the period in six years but behind the levels of six and seven years ago.
Ethanol production typically dips at this time of year and output had been running at record rates from late last year through early spring, causing supplies to approach the 2020 records in March.
U.S. ethanol stocks have since experienced a seasonal drawdown but remain at record levels for the date, with strong rates of both production and use somewhat offsetting each other. Huge exports have contributed to the elevated use levels in recent months.
On the other hand, implied U.S. motor gasoline demand has not necessarily been impressive. Over the last couple of months, rates have been similar to the year-ago levels but well off the volumes before the pandemic, which was when demand for U.S. gasoline is thought is thought to have peaked.
Increased fuel efficiency and post-pandemic changes in driving patterns – particularly remote working – have reduced U.S. gasoline consumption, an inherent threat to the U.S. ethanol industry.
But the push for cleaner fuels abroad has been a bright spot. Although exports accounted for just 11% of U.S. ethanol produced in the 2023-24 marketing year, shipments reached record levels, supported by Canadian, British and Indian demand.
Although exports have been the cornerstone of the U.S. ethanol industry this year, they have largely slowed below the year-ago levels in the last month or so, hitting an eight-week low last week.
Exporters do have a cushion, as September-March shipments were easily a record for the period, up 26% on the year.
However, this recent easing in ethanol exports could potentially be offset by a bump in U.S. gasoline demand this summer.
As of April 2025, some 53% of Americans planned to take leisure vacations this summer versus 48% a year earlier, according to Deloitte's annual travel survey. This is despite a decline in their sense of financial well-being over the last year.
The more frugal approach means that Americans plan to increasingly favor driving trips versus the previous few summers, including a higher frequency of trips as many are adding multiple short getaways.
Gas prices are largely friendly for that effort, with the national average price for unleaded fuel sitting about 11% lower than a year ago.
But consumer habits can abruptly shift whenever economic uncertainty spikes, and 2025 has been particularly rife with those risks.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.