The US ethanol market continued to see thin trading July 24 as market participants tried to digest a surprising data release from the US Energy Information Administration on July 22.
"Everyone was expecting bearish stats because the cash market was bearish," said one source.
The EIA said in its weekly ethanol production and inventories data release that output dropped 23,000 b/d in the week that ended July 17 to 908,000 b/d. It was the first decline after 11 consecutive weeks of increasing production.
Stocks also fell sharply, plunging 807,000 barrels to end the week at 19.801 million barrels, the lowest level since the week that ended December 30, 2016.
Both the inventory and output figures were far below market expectations.
The benchmark Argo ethanol market had been trending lower after tightness early in the month boosted prices to nearly eight-month highs.
S&P Global Platts assessed the benchmark Argo market at $1.3015/gal July 23, up 0.40 cent on the day and up 6.65 cents from July 21, right before the data was released.
Still, market participants queried the data.
"There's no way that's a real draw," said a second market participant. "But the number is the number," he added, saying it was the only data the market has to refer to.
Sources said the data may not have captured product in transit between destinations and also may not be fully accounting for ethanol being produced for hand sanitizer.
Without confidence in where supply and demand stand, some traders are waiting to see if prices shift based on the tightness shown in the data or if sellers lower offers amid ample availability.
"I hate the idea of trading on the stats," said the first source. "I want to trade based on what I see in the market."
