Ethanol Blog

Ethanol Futures Slip on Supply Growth

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol supplies continue to compound despite the growing increase in overall demand for blending. The increased demand is expected due to seasonal market support. The combination of strong production growth, due to recent stability in corn prices, and already large stockpiles of ethanol which have been carried into the spring has created some underlying price pressure through the complex.

Total ethanol supplies increased 2.4% over week-ago levels, reversing the trend seen through the early part of March. Currently ethanol stocks are over 36% over year-ago levels, and with the expectation that additional production will be seen in the coming weeks, this year-over-year surplus may continue to grow steadily.

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Production increased just 0.6% over the previous week, but the cumulative impact of production through the spring is likely to add even more weakness to the market, as currently total ethanol production is nearly 8% ahead of last year's pace.

This could continue to keep prices bearish through much of the spring and summer as supplies grow; traders will feel less optimistic that seasonal demand support can use up the excess product.

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

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