COVID Places DDGS in Short Squeeze
Ethanol production declined 42,000 barrels per day during the week ending December 25. Production was down 4.3 percent for the week and 12.4 percent below output during the same weekly period last year. Despite the reduced production, ethanol stocks find themselves at a 32-week high due to the pandemic fueled downturn in gasoline demand.
Ethanol production has slowed in order to stem an oversupply situation like the one seen back in April when stocks pushed to an all-time high of 27.689 million barrels. Stocks are currently seen at 23.504 million barrels. Reduced driving demand as reduced the demand for ethanol, however, feedlot demand remains strong, causing a short squeeze in DDGS and driving prices higher.
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