Ethanol Blog
Rick Kment DTN Analyst

Thursday 09/13/12

Ethanol Rack Prices Weakening

The national average rack price has fallen 8 cents per gallon during the last two weeks. Although given the pressure in the corn market during this time (December futures prices fell 26 cents per bushel), traders are justified pushing both futures and cash ethanol prices lower, but many are starting to become even more concerned with building ethanol supplies and expected sluggish seasonal demand through the rest of the fall and winter.

Traditionally, driving activity slows following the Labor Day holiday. This affects ethanol and gasoline demand. The implications of sluggish demand given uncertainty in the economy and seasonal trend may not offset any cutback seen during the last two months in ethanol production, and could allow for even greater inventory building through the remainder of the year.

If this happens, rack prices are most at risk, because this is the segment of the market that has physical inventory, which will affect overall blending activity and retail markets. The continued uncertainty of the demand trend for ethanol during the next several weeks and pressure in corn markets could keep rack prices weak.

Rick Kment can be reached at

Posted at 3:35PM CDT 09/13/12 by Rick Kment
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