Ethanol Blog

Increased Supplies Get Traders Attention

Rick Kment
By  Rick Kment , DTN Analyst

Increasing ethanol inventories are not a huge surprise to the market. But continued bearishness in ethanol futures seems to indicate that traders don't think the worst is here yet. The EIA report released Wednesday, showed inventory levels increasing 1.3% in the last full week of September. This amounted to a 13.6 million gallon gain in available supplies, and moved the total inventory of ethanol to 790 million gallons. This is 21% ahead of year ago levels. The expectation that additional domestic demand weakness will be seen over the next couple of months and corn will be cheap is likely to keep buyers cautious at best. Ethanol prices fell 3 to 5 cents per gallon Wednesday, even though corn markets were able to scratch out a fractional gain at the end of the session. October futures closed at $1.533 per gallon after a 5.8 cent per gallon loss. The move lower is nearing long-term support of $1.469 set in June of 2010. The inability to hold this support level could create additional weakness through the entire ethanol complex.

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