The direction of the ethanol and corn futures markets took separate paths as traders returned to the market Tuesday following the long holiday weekend.
Growing corn demand uncertainty and potential upcoming winter storm system developing across the Midwest has corn traders looking for protection.
Following a very dry fall and winter, the hope of significant snowfall creates expectations that drought conditions may ease in the near future. But this may be somewhat premature and based on momentum rather than actual ground moisture levels.
With corn prices still unable to draw buyer support Tuesday, the ethanol market posted moderate gains based on the building support in the gasoline market and expectations that overall supplies of ethanol and gasoline are quickly shrinking.
This could help to put additional support into nearby ethanol futures, although it is going to have to be complimented by corn market support in order to continue to draw traders back into the market and likely push ethanol prices over the $2.40 per-gallon-mark in front-month futures.
Expect more focus to be placed on demand changes in ethanol and gasoline in the near term, despite daily moves in the corn market.
Rick Kment can be reached at firstname.lastname@example.org
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