U.S. ethanol production and blending declined slightly during the latest reporting week, but underlying demand remains stronger than a year ago. The U.S. Energy Information Administration reported Thursday that ethanol production averaged 1.099 million barrels per day during the week ended Sept. 4. Ethanol blending averaged 908,000 barrels per day, down from the previous week but 3.2% above the comparable period last year. The four-week average blending rate was also above year-ago levels. Inventories increased to 25.187 million barrels, approximately 10.3% above a year earlier. The report presents a mixed picture for corn growers: inventories are relatively large, but gasoline blending continues to provide substantial domestic corn demand. The extraordinary increase in petroleum prices adds another variable. With crude oil above $100 and diesel at record highs, biofuels are becoming increasingly attractive from an energy-security and fuel-cost standpoint.
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