Ethanol futures prices posted narrow gains Friday, but this is not enough to limit the momentum of the market seen through the last couple of trading sessions.
The weekly EIA report which posted tumbling ethanol supplies at the end of last week led to aggressive buyer support surging into the market. Front-month April contracts rallied 16.1 cents per gallon through the week. This accounts for a rally of 75 cents per gallon in front month futures in the last six weeks.
It is uncertain just how much buyer support remains under this market, but as inventory is expected to move to destinations, prices may quickly be readjusted. Activity levels through the complex seem to be focused on the need for short term product deliveries. Traders are still trying to focus on the underlying movements in corn futures, but the premiums already built into the nearby ethanol contracts may lead to wild market shifts over the next couple of weeks.
But for now, traders seem content looking for even higher price levels in nearby contract months.
Rick Kment can be reached at firstname.lastname@example.org
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