The ethanol-to-RBOB-gasoline futures price spread took a significant shift over the last week due to the recent pressure in ethanol markets and the expiration of June ethanol contracts. This move in the ethanol market follows the recent rebuilding of inventory levels from three-year lows, as well as the potential that buyers may be focusing on limited demand. The ethanol market currently is holding at a 36-cent-per-gallon discount compared to front-month RBOB gasoline futures. But this is significantly decreased from the 6-cent discount seen earlier in the week. This will not likely limit any additional ethanol from being blended over the short term, but could cool the jets of some buyers as they look at a more uncertain price and demand movement in the ethanol complex through the rest of the summer.
Rick Kment can be reached at firstname.lastname@example.org
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