Ethanol Blog

Falling Inventory Sparks Buyer Support

Rick Kment
By  Rick Kment , DTN Analyst

Front-month December ethanol futures posted strong gains Wednesday afternoon following the announcement by the EIA that ethanol inventory levels slipped lower last week.

Total inventory levels fell 8.4 million gallons despite growing production levels. This sparked some light-to-moderate buyer support as traders continue to refocus on the potential that spot market supplies may continue to be hard to find.

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There is less concern about long-term supplies, although the surge in front-month prices helped to draw additional buyers into the market. Trade volume is expected to remain sluggish through the rest of the week, even though markets trade Friday; participants are likely to remain on the sidelines or absent until next week.

Even though inventory levels are expected to be closely watched once the holiday season passes, more focus will be placed on winter demand and if production levels will stabilize. This could further pressure deferred contract prices through most of 2015.

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

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