Ethanol Blog

Weekly Ethanol Close Gains Attention

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol futures posted an extremely solid rally through the first full week in May. The combination of expected demand support coming from energy markets and the bullish weekly EIA report led to a strongest weekly gain since March.

June ethanol futures posted moderate gains Friday, gaining 1.7 cents per gallon, and moved prices back above $1.65 per gallon. But the movements at the end of the week accented the aggressive buying nature that started early in the week, and have gained additional attention as the week progressed.

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Even though ethanol inventory levels remain well above year-ago levels, the erosion in supplies during the last two weeks and the consistent drop in ethanol production are causing some in the market to think supplies may get much tighter over the next two months.

Demand for blended product continues to grow, and traditionally continues to grow steadily until through the Memorial Day weekend. This could help to further narrow the discount ethanol markets carry to the RBOB gasoline markets, especially if overall production levels remain lower. Corn costs have not been an issue in overall ethanol market activity this year, as the current growing conditions and acreage estimates are likely to keep prices hovering below $4 per bushel most of the spring, and potentially well into the summer.

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

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