Ethanol Blog

Ethanol Prices Continue Higher

Rick Kment
By  Rick Kment , DTN Analyst

If results of a two-week rally in the market make a trend, then the ethanol market is heading for a strong market surge. The turnaround in the market remains focused on renewed buyer support in the corn market, which is helping to push prices higher through the middle of October, and a two-week draw on ethanol inventory levels.

The higher corn prices are expected to limit aggressive ethanol production over the near future, but it is way too early to try to state that prices will continue to move higher at the current pace. During the last two weeks, front-month ethanol prices have rallied 21 cents per gallon.

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But following week-to-week data of both inventory levels, and production reports from plants, may not give the best indication of longer-term activity which is likely to play a bigger role in price direction through the end of the year.

Even if inventory levels are contained to moderate levels, total stock on hand is still well-above year-ago levels at a time when demand traditionally slips lower. Trying to rally and sustain energy and ethanol prices through the fourth quarter of the year is a challenge even without a record corn crop and uncertain domestic demand looming on the horizon. But the lower prices are likely helping to spark export activity, even though accurate data remains delayed, and sometimes hard to pinpoint.

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

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