Corn futures soared higher Friday in following the release of the USDA supply and demand report. This drew active buying activity into the market which continued to grow until nearby corn futures contracts reached the 40-cent daily limit. With sharp gains once again developing across the corn markets, ethanol producers tried to protect themselves and increased operating production costs by pushing ethanol prices higher. Nearby ethanol prices rallied 12 cents per gallon higher Friday as traders close out both the month and the quarter. Usually when a surge in the corn market pushes ethanol prices higher, traders also are cautious of the movements in the RBOB gasoline markets. But that seemed to be an afterthought through most of the session as October contracts posted a 19-cent rally Friday, leaving both energy and ethanol traders reeling from the swift and sharp gains seen at the end of the month. How much of this recent rally has more to do with end-of-the-month and quarter positioning and short-term covering is yet to be determined, and could make for an exciting start to the month of October.
Rick Kment can be reached at email@example.com