Ethanol Blog

Volatility Rules Ethanol Prices Still

Rick Kment
By  Rick Kment , DTN Analyst

May ethanol futures prices posted aggressive market gains Thursday after a downturn in the market developed earlier in the week. Growing ethanol stocks and current pressure in corn prices would not have predicted the late-week rally seen in nearby ethanol contracts. Although trade volume remains light in nearby contracts, volatility seems to be the nature of business, and this is likely to continue through the next several days, and even weeks. Ethanol demand is likely to remain strong. And although transportation delays are more limited than over the past couple of months, the focus on moving product from production plants to metro areas could be a challenge over the next couple of months. It is unlikely that prices will see the price support over the last month, with prices nearing $3 per gallon once again. But a wide range between $2.10 and $2.50 per gallon is very likely as traders adjust to the upcoming demand and supply concerns. Commercial traders are concerned about gaining access to product on a daily basis, allowing nearby price spreads to widen in the Thursday session.

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

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