The combined 41 cent loss in December corn futures over the last two trading sessions has created increased uncertainty across the ethanol markets through the middle of September. Even before this most recent downward slide in corn prices, the ethanol market seemed extremely vulnerable as traders were uncertain of both short- and long-term direction in the corn market as well as the ability to sustain current demand for ethanol through the end of the year. But as general commodity pressure pushed grain markets lower based on widespread fund liquidation, ethanol futures fell over 14 cents per gallon. Although the market is still technically held together, cracks are showing in the market as traders adjust not only to lower production costs, but also the uncertainty of futures market direction. The long-term outlook is still showing tight corn supplies, but with no additional news surrounding the projections of running out of corn, investment traders are growing tired of the same old headlines. This has pushed ethanol futures prices to $2.279 cents per gallon, which is the lowest price since the first week in July. Corn futures have given back nearly $1 per bushel from the August highs, with additional pressure likely to develop without any new reasons to attract the investment interest back into the market.
Rick Kment can be reached at email@example.com