Ethanol futures posted light to moderate gains as traders returned from the long holiday weekend. The early support in the corn market seemed to fade a little, through the end of the session, but remained positive.
This gave additional support to the ethanol market which has fallen more than 10 cents per gallon through the last week and a half of August. September ethanol futures gained 1 cent per gallon, to close at $2.563 per gallon.
Despite the wider price spread seen during the last two weeks of August, the price for first the trading session of September is within a fraction of a cent per gallon of where prices started on August 1 ($2.563 per gallon September 4, vs. $2.567 per gallon August 1).
Although the start of the month may be nearly identical, there is increased uncertainty as to the direction of the corn and ethanol markets during the next several weeks.
With ethanol production continuing to erode due to tight margins and higher corn prices, and demand for corn in general may start to weaken, there could be wide price shifts over the coming days and weeks, which could easily break prices out of the 10-cent price before the end of September arrives.
Rick Kment can be reached at email@example.com