Despite the trading week being shortened by the Memorial Day holiday on Monday, aggressive price support quickly developed through the complex. This aggressive buying pushed the front-month ethanol market more than 14 cents per gallon higher through the week. Corn futures were supported moderately through the week with a 5-cent gain seen in front-month futures.
But the most aggressive support is developing from the idea that ethanol supplies continue to fall. In the Thursday EIA report, ethanol stocks were at the lowest levels since the EIA started collecting inventory data in 2010.
This did not even account for movement of product through the holiday weekend and current week. Traders are expecting that stock levels will continue to fall, which is helping to support ethanol prices. Gasoline price levels slipped 5 cents per gallon through the week, which would indicate that ethanol prices are being driven by their own market fundamentals, and not mirroring the movement in corn or energy markets as is typically seen.
Rick Kment can be reached at firstname.lastname@example.org
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