Ethanol Blog

Ethanol Prices Chase Corn Higher

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol futures have continued to follow the trend seen last week with a 4 cent per gallon rally developing Monday despite overall trade volume remaining sluggish due to the Columbus Day holiday. With front-month ethanol futures now above $1.60 per gallon, traders are primarily focused on the strong double-digit rally in corn prices. This gain offsets the higher production costs coming from the corn market and could signal additional gains if higher corn prices continue to be seen. November ethanol futures posted a strong weekly close at the end of last week. This is the first move higher in the November ethanol contract since the middle of August. Although it may be too early to completely jump onto a price surge bandwagon, the inability to push corn prices significantly lower through the next month may help to put more focus on ethanol price stability through the end of the year. Ethanol production is expected to continue to remain strong, but the lower prices may help to move additional product through both domestic and export markets, although the end results of any demand growth will be hard to quantify over the near future.

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