EIA maintains 2021, 2022 ethanol forecasts, discusses corn prices

By Erin Voegele | May 11, 2021

The U.S. Energy Information Administration maintained its forecasts for 2021 and 2022 ethanol production in its latest Short-Term Energy Outlook, released May 11. The outlook for 2021 ethanol blending was increased slightly. The May STEO also includes a discussion the recent spike in corn, ethanol and renewable identification number (RIN) prices.

The EIA currently predicts fuel ethanol production will average 960,000 barrels per day this year, up from 910,000 barrels per day in 2020. Production is expected to increase to 990,000 barrels per day in 2022. Both figures were maintained when compared to forecasts made in EIA’s March STEO and the agency’s April STEO.

On a quarterly basis, U.S. ethanol production averaged 900,000 barrels per day during the first quarter of this year. Production is expected to increase to 960,000 barrels per day in the second quarter and increase to 980,000 barrels per day in the third and fourth quarters. In 2022, ethanol production is expected to average 970,000 barrels per day in the first quarter, increase to 990,000 barrels per day in the second and third quarters, and reach 1 million barrels per day in the fourth quarter.

Ethanol consumption is currently expected to average 890,000 barrels per day in 2021, up from the April STEO projection of 880,000 barrels per day. The forecast for 2022, at 910,000 barrels per day, was maintained when compared to the April outlook. Ethanol consumption averaged 820,000 barrels per day in 2020.

The May STEO also discusses prices for ethanol and RINs. According to the EIA, the front-month futures price of fuel ethanol closed higher than $2 per gallon on April 14 for the first time since Dec. 3, 2014. Fuel ethanol prices increased further throughout the remainder of April and settled at $2.34 on May 6, 23 cents per gallon higher than the front-month reformulated blendstock for oxygenate blending (RBOB) contract.

The EIA said higher ethanol prices are mostly the result of higher corn prices. The front-month futures price for corn closed at $7.60 per bushel on May 6, up 144 percent when compared to the same period of 2020 and the highest price since November 2012.

The EIA also notes that that the fuel ethanol-corn crush spread has decreased and has largely been negative since November 2020.

Higher ethanol prices are also helping to push RIN prices higher. According to the EIA, RIN prices have increased sharply over recent months due to uncertainty concerning Renewable Fuel Standard blending requirements for 2021 and increased ethanol feedstock costs. The EIA said RBOB prices may also be pushed higher.

A full copy of the May STEO is available on the EIA website