Alto Ingredients Inc (ALTO)

[Rule_62]

(oops, it's even more, my first iteration forgot that prduction and consumption numbers are daily, not weekly) Here's another way to look at it.

Ethanol production/day: 970 thousand barrels
Ethanol inputs/day: 854 thousand barrels

Difference: 116 thousand more barrels produced than consumed domestically/day. That's 812 thousand barrels/week

Draw down on inventory week over week: 17,705- 17,335 = 370 thousand barrels

Add the excess production not consumed by domestic markets for the week to the draw down on inventory and you get 1.182M barrels unaccounted for.

Do you think that just might be exports?

My conclusion would be that export demand is not only sucking up any production surplus generated, the demand is strong enough that it's drawing down on inventory. If the rate continues through the balance of the year, exports could well exceed 35M barrels instead of 19.45M.

And we don't know what the final RFS will be yet. Odds of it going lower than the original number released last November? I would dare say zero. Odds of it increasing to at least 14B? What do you think? I think it's pretty good, if not higher. Add those increasing exports, and there's a very real danger there could be a production shortfall, not a surplus.

But hey, I didn't dump my shares today and then announce to the world that ethanol production is overshooting demand. But then why would I, especially when the numbers that came out today suggest the opposite.