U.S. ethanol production and stocks both dipped slightly, according to the latest weekly data.

The U.S. Energy Information Administration says production averaged 1.11 million barrels per day, down 2,000 barrels on the week due to tighter margins, but up 35,000 on the year because of demand expectations, supporting domestic corn usage. Ethanol is the largest single industrial use of U.S. corn, so weekly production trends are closely watched by grain markets as an indicator of feedstock demand.

The Iowa State Center for Agricultural and Rural Development says the estimated operating margin for the average Iowa plant declined due to higher corn prices and is now below year-ago levels, but remains in positive territory. Iowa is the top ethanol-producing state, making its plant margins a widely cited barometer of industry profitability.

The weekly demand numbers were mixed. Ethanol stocks of 25.035 million barrels were 171,000 lower than the previous week, but 2.471 million higher than this time last year. The Renewable Fuels Association says net inputs of ethanol purchased by refiners and blenders hit a more than five-year high, even as the volume of gasoline supplied to the market declined. That combination points to a rising share of ethanol in the domestic fuel blend, the variable tracked by the industry's blend rate.

Ethanol exports averaged 104,000 barrels per day, 58,000 less than the week before, but 15,000 more than a year ago.

The USDA will update its corn for ethanol use estimate on September 11, a report that typically moves corn demand forecasts for the marketing year.