Ethanol Blog

Spot Ethanol Prices Bucking the Trend for Now

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol futures moved in different directions Monday as traders seem to be taking a split approach to the overall outlook of the market.

Nearby contracts posted light to moderate gains with spot month futures surging ahead and rallied 2.1 cents per gallon. This pushed prices to $2.081 a gallon, with traders looking for additional tight short-term supplies through the Thanksgiving holiday season.

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But the aggressive support in front-month futures are becoming much longer in the tooth as spreads are widening significantly. This price shift which has developed over the last two weeks is putting even more focus on gaining immediate supplies with less concern about long-term market support.

December contracts are currently prices at a 33-cents premium over the February contract, and there is little evidence that the recent support in front-month futures can be supported long term.

The widening price spread comes while pressure continues to develop through the rest of the energy complex. This is creating additional uncertainty through the market, although current ethanol market stability is still clinging to the ability of December contract to hold current market premiums.

Spot month ethanol futures are still trading more than 5 cents over the spot RBOB gasoline contract, which long term is not sustainable and limits buyer support through the complex. However, given the need to gain access to product on a short term, current price ranges continue to hold for the time being.

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

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