How front-month ethanol futures react to a loss of 6 to 7 cents per bushel in the corn market seems to have had an adjustment during the last three weeks.
The ethanol market has moved steady to higher in each of the last eight trading sessions. This has created the expectation that additional buyer activity is stepping into the market following Jan. 1, and that the tight corn supplies can help to build additional value to the ethanol market.
There is very little evidence during the last two weeks that overall stocks continue to remain high, and concerns about more sluggish gasoline demands could negatively affect ethanol clearance.
But Thursday's futures trade was an example that buyers continue to hold the idea that ethanol markets are gaining support, even though corn prices fell 6 to 7 cents per bushel. Front-month February futures closed 0.4 cents per gallon lower, at $2.339 a gallon.
Although the general tone of following the corn market still is intact, at least commercial traders are starting to focus more on future ethanol use and demand and the potential for growth through the year, rather than just on corn market shifts.
It will be interesting to watch if the market returns to its more normal, and close trading, relationship during the next two trading sessions, or if ethanol prices can carve out their own price range and break away from the corn market tie, at least for more than a couple of days.
Rick Kment can be reached at firstname.lastname@example.org
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