From the Director’s Desk: Strong June Sales Moves Some Inventory, Advanced Biofuels Producer Payment Program Deadline Approaching?
Strong June Sales Moves Some Inventory
Just one month ago I was pondering record inventory levels (May) and wondering what a 400,000-ton inventory number at the end of June might mean for the upcoming heating season. On Tuesday, the U.S. Energy Information Administration released the June data for its Monthly Densified Biomass Fuel Report and in just one month, the picture has changed significantly.
The numbers (5-year average):
June 2024
East
Sales – 103,602 tons (88,886)
Production – 95,183 tons (95,016)
Inventory – 175,633 tons (149,422)
West
Sales – 48,283 tons (31,323)
Production –29,087 tons (37,036)
Inventory – 89,343 tons (73,052)
South
Sales – 15,325 tons (27,414)
Production – 12,026 tons (20,680)
Inventory – 62,745 tons (52,123)
All U.S.
Sales – 167,210 tons (135,142)
Production – 135,957 tons (156,306)
Inventory – 327,721 tons (274,597)
File this one under “Didn’t see that coming.” It all starts with sales and producers sold 167,210 tons of pellets in June, a number they haven’t achieved since 2020. Sales in the East and the West were well ahead of 5-year averages and inventory levels in each of these regions modulated downward, closer to 5-year averages. I think the ‘g’ word, “glut” is no longer applicable and now inventory levels feel more like “robust” or “more than adequate.” We’ll take it.
Interestingly, this year was the first year where wood pellet inventories decreased in June. Last year, inventories rose by 30,000 tons. In 2022 they increased by 10,000 tons. A decrease this year saved producers from building inventories of over 400,000 tons, a level not seen since 2017.
After a string of disappointing data releases, these June numbers were a welcome change. Sales are up, and inventory levels have settled into a number more closely resembling Goldilocks’ level of “just right.”
Advanced Biofuels Producer Payment Program Deadline Approaching?
A member called me last week and urged me to remind our other members about the October 31 deadline for the Advanced Biofuels Producer Payment Program, a farm bill program that incentivizes the production of varying biofuels, including wood pellets. The program typically has an application period open throughout October, but a recent visit to the program’s web page shows applications are accepted October 1 – October 31, 2023. Is the website out of date? Is the program, like the farm bill itself in a sort of limbo? The PFI will do some digging and report back in future editions of the Pellet Wire, but I highly recommend a visit to the program page and a review of the Advanced Biofuels Payment Program fact sheet (link in Industry News).
—Tim Portz
Executive Director
