Commercial market liquidation quickly developed through the day Wednesday, with moderate losses seen early, but additional selling activity accelerated near closing bell.
At this point in the game it is too early to tell if the sharp losses came from additional lack of commercial support, or if the simple lack of any additional news in the market allowed for traders to lose sight of the higher prices seen during the last couple of weeks.
The sharp losses were contained to the old crop corn activity, which may signal additional losses in demand through the rest of the spring and summer. But the ethanol market seems to be focused less on the reason, and more on the intensity of the price drop.
This caused nearby and deferred ethanol futures to fall between 3.7 and 5.1 cents per gallon. This lack of support in the corn market is having a significant impact in the ethanol market. This price decrease follows the additional losses in production from the latest EIA report.
The main focus in the ethanol market is the sharp losses in corn prices, which significantly affects production costs as ethanol producers focus on summer production runs.
Rick Kment can be reached at firstname.lastname@example.org