Ethanol prices remain weak with follow-through pressure developing across the ethanol futures market Tuesday. The combination of expected inventory growth through early May, weakness in spot ethanol prices, and pressure in RBOB gasoline markets has created lackluster interest across the ethanol futures market Tuesday.
Nearby contracts are steady to 1.5 cents per gallon lower as traders focus on price levels of $2 per gallon or less through the early part of May. At this point it is uncertain what would draw traders actively back into the ethanol futures market, as inventory levels are expected to continue to build in the upcoming EIA reports, as well as expected production growth.
Transportation delays seen early in the spring have been cleared up for the most part, allowing the industry to get back to a more normal routine, with very little fear of running out of product through the summer months. Although the industry remains far from the "ethanol glut" seen in the last couple of years, the tendency to keep supplies much tighter to demand is being focused upon by many ethanol plants as they try to maintain positive margins through the summer and upcoming fall months.
Rick Kment can be reached at firstname.lastname@example.org
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