Ethanol prices have seen significant gains over the last two trading sessions following the EIA report Wednesday. This report indicates that additional sharp inventory losses are seen through the country as well as sluggish production of ethanol.
But on the continuous chart, the ethanol price continues to erode for the week. That is due to July futures going off the board Wednesday, leaving the discounted August contract as the new front month contract month. Prior to July contracts expiring, the August contract held a near 10-cent discount to the July. This relationship accounts for the shift in the overall ethanol price despite gains of nearly 10 cents seen over the last two trading sessions in August futures.
There continues to be more and more focus on finding available supplies of ethanol through the rest of the summer and remainder of the year. The recent rally in the energy segment has also put more pressure on the price comparison between ethanol and RBOB gasoline as the price spread has widened to nearly 40 cents per gallon at the end of the week.
Rick Kment can be reached at firstname.lastname@example.org
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