Ethanol Blog

Ethanol Futures Lose Recent Momentum

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol futures posted moderate to strong losses Monday as traders returned to the complex. The inability to significantly move weekly closing price levels over the last two weeks seems to be creating some additional bearish tones through the ethanol market.

This caused front-month ethanol futures to hold moderate losses of 3.7 cents per gallon late Monday, which pushed the front-month futures price below $1.40 per gallon once again.

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The focus on continued strong ethanol production through the spring and summer months, as well as the inability to significantly decrease inventory levels could drive additional pressure in ethanol prices in the next couple of months.

Gasoline prices have seen moderate support in deferred contracts based on seasonal demand building in the complex, but if inventory levels do not consistently work lower in the next month, there is the potential that buyers who have recently returned to the market may not stick around.

The expectation that supplies will continue to remain strong over the coming months could severely limit additional price support in both the crude oil and RBOB gasoline markets.

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

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