Low corn prices, strong margins, and gasoline prices increasing by 6% over the past two weeks have pushed U.S. ethanol production to a record high. U.S. biofuel plants produced an average 972,000 barrels of ethanol for the week of June 9 through June 13 – 28,000 barrels per day more than the previous week and the highest level of production since records began being kept four years ago. Margins for ethanol producers in March reached $1.55 per gallon as bad weather hampered transport forcing buyers to pay more for available supplies. Margins have since fallen, equaling .50 cents per gallon from .73 cents per gallon two weeks ago. There is also price pressure on dried distillers’ grains (DDGs) in light of China’s halting U.S. imports because of the possible existence of Syngenta’s MIR 162 strain of corn that has not yet been approved by Beijing. Data shows U.S. ethanol inventories during the week of June 9th were 15% higher than levels a year before causing concern for some investors, however the U.S. is entering into its summer period of high demand which should balance the increased inventory.
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