Ethanol Blog

Ethanol futures have posted aggressive gains Monday following additional concerns about tight ethanol supplies heading into late spring and early summer months.

Front-month April futures are within striking distance of $3 per gallon, after rallying 13.9 cents per gallon. The rally helped to push ethanol contracts to a premium over the RBOB gasoline market for the first time since November 2011.

This is not expected to create a significant long-term shift in the market as most end users are committed to current short-term blending rates, and the expectation for the market to ease over the next two months is still prevalent.

But the quick moving shifts in both the ethanol and RBOB gasoline market could help to draw additional light support to petroleum markets as traders look to try to minimize market volatility over the next several trading sessions.

Ethanol markets were trading at a 49.2-cent discount to the RBOB gasoline market just two weeks ago, and now hold a 9.7-cent-per-gallon premium to the market, creating a two-week swing of nearly 60 cents per gallon in such a short period of time.

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

(ES)

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