Sudden Demand Escalation Rushes US Ethanol Production to Rise in Q4 2022
Sudden Demand Escalation Rushes US Ethanol Production to Rise in Q4 2022

Sudden Demand Escalation Rushes US Ethanol Production to Rise in Q4 2022

  • 31-Oct-2022 2:57 PM
  • Journalist: Patrick Knight

The weekly prices of Ethanol in the US market continued to increase on account of demand from the downstream biofuel sector. The country is already running low on diesel and is now running low on gasoline. The fuel situation on America's East Coast is getting worse. The country's demand for Ethanol-based biofuel has increased as the government aims to decrease its dependency on petroleum-based fuels.

According to the most recent Energy Information Administration data, domestic Ethanol production increased for a fourth consecutive week, with stockpiles of the fuel edging up 0.9% and blender inputs likewise trending upward. Towards the weekend, October 28th, the Ethanol prices in the US market reached USD 870 per MT, FOB Texas.

The primary feedstock required by Ethanol manufacturers to produce Ethanol is corn. The country faced drier-than-usual weather conditions hindering corn production, consequently impacting the demand-supply gap. Apart from feedstock availability and price fluctuations, high commodity prices and inflation in the country drove the market prices of Ethanol. Amidst this inflation, the US cost pressure has started to diminish, which could persuade Federal Reserve policymakers to choose smaller interest rate hikes.

As per the World Bank's biannual Commodity Market Update, the anticipated agricultural prices may get impacted by persistent concerns about global economic demand conditions. The expected rising input costs may burden food producers in the forthcoming weeks. The domestic and international demand-supply chain may pause in the upcoming weeks as one of the major rivers of the US is drying.

As per ChemAnalyst, the prices of Ethanol in the US market may continue to increase at a stagnant pace because of the increasing energy demand. Besides domestic demand, European region will likely face increased energy prices as the demand for the same will increase with the seasonal changes.

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