Preholiday buying before the Labor day weekend helped to move additional ethanol markets out of storage. This pushed total ethanol inventory 2.1 million gallons lower, according to the latest EIA data.
With total stocks at 680.4 million gallons the last full week of August, buyers have been aggressively stepping into front-month September contracts during the last couple of trading sessions. This inventory level is 13.4% under year-ago levels, and could create tightness in the market if short-term production levels do not significantly increase.
The still prevalent concern of corn supply and corn quality now in the field is adding to the concern. The premium in the September contract is nearing 70 cents per gallon over the October contracts. This shows how concerned many commercial traders are about the recent pullback in ethanol supplies.
Rick Kment can be reached at firstname.lastname@example.org
© Copyright 2013 DTN/The Progressive Farmer. All rights reserved.