Ethanol Blog
Rick Kment DTN Analyst

Friday 02/15/13

RBOB Gasoline to Ethanol Spread Doubled

Within the last month, the price spread between the RBOB gasoline and ethanol futures market has doubled. RBOB gasoline futures have gone from a 36-cent-per-gallon premium over the ethanol market to a 78-cent-per-gallon premium. This support is twofold, coming from strong demand support in the gasoline market as buyers are focusing on potential spring and summer demand, and the recent pressure in the corn market weighing on ethanol price levels.

Thursday posted a wide shift in prices, where the spread increased by 11 cents in one session. The expectation that additional ethanol production is coming back on line through the spring months ahead of the summer driving season and expected inventory pull down of gasoline stocks.

There is growing interest in the overall demand growth through the next couple of months, and this could widen the price spread over the near future even wider than the current 78-cent-per gallon levels.

Rick Kment can be reached at rick.kment@telventdtn.com

Posted at 5:06PM CST 02/15/13 by Rick Kment
Comments (1)
If demand for spring and summer is strong, the price of ethanol would be up and the margin narrows. The argument does not make the case for a wider margin, specially if the major input cost -corn is up. My reading is of a few plants coming back online is the result of a sourcing switch from Brazilian imports to a period where we will make a little more. With the onesy, twosy plants coming back online, to assume that there will be a glut is early to make this call: total inventory is headed down and crush margin is still negative... 15c loss per gallon on 100million is still 15 million dollar loss. Real money.
Posted by Eddy Lahens at 7:16PM CST 02/15/13
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