EIA lowers ethanol production forecast for 2019

By Erin Voegele | July 09, 2019

The U.S. Energy Information Administration has slightly lowered its forecast for 2019 ethanol production but is maintaining its outlook for 2020 production, according to the July edition of the EIA’s Short-Term Energy Outlook, which was released July 9.

The EIA currently predicts ethanol production will average approximately 1.03 million barrels per day this year, down from 1.05 million barrels per day last year. In June, the EIA predicted 2019 ethanol production would average 1.04 million barrels per day. The EIA attributed the decrease in its latest STEO report to low ethanol producer margins, limited domestic growth potential, and earlier production outages driven by significant flooding in the Midwest during March and April.

The EIA currently expects production to rebound to 1.05 million barrels per day next year. “Much of this ethanol continues to be destined for export markets,” the agency said, noting U.S. net exports averaged nearly 110,000 barrels per day last year and are forecast to fall to an average of approximately 90,000 barrels per day in 2019 and 2020. The EIA said the decrease is expected to be driven by lower U.S. ethanol production and market conditions that are less conducive to trade with Brazil.

The STEO also addresses the U.S. EPA’s recent action to allow year-round E15 sales. The EIA said its forecasts indicate the impact of year-round ethanol sales will be minor during the STEO forecast period. Ethanol consumption averaged approximately 938,000 barrels per day last year and is expected to increase to 942,000 barrels per day this year and 953,000 barrels per day in 2020. The projected increase in consumption through 2020 is primarily attributed to increasing motor gasoline consumption and limited E15 market penetration over the next 18 months, the agency said.

The forecasted level of consumption would result in the ethanol share of the total gasoline pool increasing from 10.1 percent in 2018 to 10.2 percent in 2020. “This forecast ethanol share assumes that growth in higher-level ethanol blends is limited in the near-term by recent small refinery exemptions that reduced volumes for renewable fuel required under the [Renewable Fuel Standard] and ongoing hurdles related to retail infrastructure and consumer demand,” the EIA said in the STEO.

The EIA predicts biomass-based to be affected by current RFS targets and recent duties placed on biodiesel imports. Biodiesel production averaged 119,000 barrels per day last year, and is expected to increase to 130,000 barrels per day this year and 145,000 barrels per day in 2020. Largely due to duties imposed on foreign biodiesel imports from Argentina and Indonesia in late 2017, the EIA said net imports of biomass-based diesel fell for the second consecutive year to an average of 15,000 barrels per day in 2018. Imports are expected to remain near that level this year and in 2020.

The EIA’s most recent weekly data shows ethanol production averaged 1.081 million barrels per day the week ending June 28, up from 1.072 million barrels per day the previous week.

The agency’s most recent monthly data shows the U.S. imported 313,000 barrels of ethanol in April, all from Brazil. The U.S. exported 3.578 million barrels of ethanol in April, primarily to Brazil, India and Canada.