Aggressive buying quickly redeveloped in ethanol futures market Tuesday with March futures posting a 5-cent-per-gallon rally. This moved prices to $2.34 per gallon in front-month March contracts.
Other nearby contracts posted gains of 2.2 to 2.9 cents per gallon. Traders who have been following the supply tightness in ethanol markets based on transportation issues still remain aggressive, but focus their attention on production costs. Corn futures rallied 12 cents per bushel Tuesday, accounting for a rally of 27 cents per bushel in the last three trading sessions.
The building momentum in the ethanol markets continues to drive additional buyer support into nearby and deferred ethanol futures based on longer term production costs. For now, most traders are not concerned about the higher costs of corn limiting production, but if the current pace of the market continues, plants may start readjusting longer-term production expectations.
Rick Kment can be reached at email@example.com
© Copyright 2014 DTN/The Progressive Farmer. All rights reserved.