Industry sources say Cedar Rapids’ ADM dry mill restarted after being partially idled

CHICAGO - U.S. ethanol output rose more than expected to near-record rates last week, the U.S. Energy Information Administration said Wednesday.

Ethanol makers, including top producer Archer Daniels Midland Co., ramped up output as profit margins improved on rising fuel prices and demand ahead of the summer driving season, traders and biofuel industry sources said.

The EIA said ethanol production in the week that ended June 3 averaged 1.006 million barrels per day, the second largest rate ever after the 1.008 bpd seen in the week ended Nov. 20, 2015. Output increased 46,000 bpd from the previous week, in the biggest spike since May 2015. Traders, on average, predicted output at 960,000 to 980,000 bpd.

'We expected production to ramp up, but not as much as reported,” said an ethanol analyst at a publicly traded company, who was not authorized to speak with the media.

'With robust margins, there isn't any reason why the industry isn't running full pace,” he added.

Ethanol stockpiles declined for the fifth week in a row, easing 544,000 barrels to 20.23 million barrels, suggesting good demand for domestic fuel blending and for export.

Prices for the ethanol byproduct distillers' dried grains, an animal feed known as DDGs, have also rallied on increased demand in recent weeks, contributing to the better profits.

ADM restarted dry mill ethanol capacity at a facility that had been partially idled in Cedar Rapids, that could have accounted for 20,000 bpd in output, two ethanol industry sources said. A company spokeswoman declined to comment on production rates at specific plants.

A facility in Ravenna, Neb., owned by Abengoa Bioenergy - a unit of Abengoa SA - also boosted output in June, Thomson Reuters Analytics data showed.

Ethanol makers generally were making 10 to 20 cents or more per gallon of ethanol produced, after costs, compared with negative spot profit margins for some plants earlier this year.