CORRECTED - US ethanol production falls 3.5 pct, stocks climb

Wed Jul 13, 2011 7:15pm BST

* U.S. ethanol production falls 32,000 bpd to 872,000 bpd

* U.S. weekly ethanol stocks rise to 18.8 mln barrels (Corrects recent high in ethanol futures to three-year high from record high, paragraph eight)

By Michael Hirtzer

CHICAGO, July 13 (Reuters) - U.S. ethanol production fell 3.5 percent while stocks climbed in the latest reporting week, despite profitable margins at many biofuel refineries.

Ethanol output totaled 872,000 barrels per day (bpd) for the week ended July 8, down 32,000 bpd from the previous week but 6 percent higher than the same week a year ago, according to the Energy Information Administration's weekly petroleum report released on Wednesday.

Stocks of the biofuel grew about 1 percent to 18.8 million barrels, EIA said.

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Graphic of weekly ethanol production:

r.reuters.com/vuq52s

Graphic of U.S. ethanol margins:

link.reuters.com/zag62s

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Last week's decline in production may be an aberration, or it may be due to isolated downtimes for seasonal maintenance at some refineries. Ethanol plants have recently enjoyed the best profit margins in at least a year, analysts and traders said.

Plants likely did not shut down in observance of the U.S. Independence Day holiday on July 4, traders said.

"Margins have been outstanding and I figured everyone was running full-bore," said Julie Ward, an Iowa-based trader at R.J. O'Brien.

"I don't know if there is a delay somewhere with how the government is getting the data and reporting it. There should be no reason why (production) should have dropped -- thoughts are it would have increased," Ward said.

Ethanol futures climbed to a three-year high in the middle of the latest reporting week, on July 6, at the Chicago Board of Trade. That high was surpassed on Wednesday, with spot ethanol ZEc1 hitting a top of $2.845 per gallon.

Corn use in ethanol production was forecast to rise to 5.05 billion bushels in the current marketing year, accounting for nearly 41 percent of the U.S. corn crop and surpassing the amount used as feed for the first time, the U.S. Agriculture Department said in its monthly supply and demand report on Tuesday. (Reporting by Michael Hirtzer; editing by Jim Marshall)