Ethanol Blog

Ethanol futures posted moderate gains Thursday, and that in itself is no significant move. But the fact that ethanol prices moved the opposite direction of the corn market is more of an unusual market shift, especially given the sharp double-digit losses in the energy markets just a day previous. Traders in the ethanol complex quickly looked past production costs and the value of gasoline when entering the market.

The weather-battered Northeast seems to be the main focus of the recent surge in ethanol prices. With the combination of Superstorm Sandy, as well as the most recent Northeastern hitting the same areas, traders are focused on the lack of ability to secure product and get ethanol to these areas.

Although this 2.2-cents-per-gallon shift in front-month contracts is not likely to create a significant long-lasting market change, the divergence of the corn and ethanol market is pointing to new factors entering the market.

Rick Kment can be reached at rick.kment@telventdtn.com