That is an increase of nearly 200,000 b/d from a year ago, but a slight decline from August production figures.

The slight reduction in ethanol production in September reflects some of the economic difficulty ethanol producers have experienced as a result of higher input costs, lower ethanol values, and the evaporation of credit in the market.

America's ethanol producers remain on pace to produce approximately 9 billion gallons of ethanol in calendar year 2008.

Ethanol demand, as calculated by the Renewable Fuels Association, continued to outpace production.

In September, the RFA estimated ethanol demand at 688,000 b/d, reflecting the dramatic increase in production from a year ago as well as the surge in imports seen in September.

According to International Trade Commission data, imports of ethanol totaled more than 107 million gallons, with nearly 68 million gallons coming directly from Brazil.

Imports increased by 18 million gallons compared to August.

RFA said the dramatic increase in imports, particularly from Brazil, is interesting for two reasons.

"First, it demonstrates that a barrier to imported ethanol does not exist," the association says.

"Ethanol from other countries can gain access to American markets if the market demands it.

"Second, it reflects the rush to take advantage of a tax loophole that expired on September 30, 2008.

"The duty drawback, as the loophole was known, allowed importers to import ethanol to the US and export another product, such as jet fuel, to avoid paying the secondary tariff on imported ethanol."