Ethanol Blog

Futures Fall on Production Gain

Rick Kment
By  Rick Kment , DTN Analyst

Even though inventory levels rebounded at the end of last week according to the latest weekly EIA report, the main focus was placed on the aggressive surge in production levels seen during the week.

Ethanol production increased 1.9 million gallons per day, which represents a 5% increase from week-ago levels. Even though overall demand for ethanol increased as blending demand going into gasoline is seasonally increasing before the holiday weekend, the surge in production took the market by surprise Wednesday.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

The impact of higher production pushing inventory levels higher 0.7% for the week led to a moderate selloff in ethanol futures. Prices fell 3 to 5 cents per gallon, as traders expect that ethanol production will continue to trend higher through the upcoming weeks.

Ethanol production can be quick to respond to market conditions, but a move like this is typically telling of a slightly more long-term trend. This could see moderate strength in the ethanol production figure over the next few weeks, which could also significantly affect inventory levels, especially if demand starts to slow following Memorial Day.

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

(ES)

P[] D[728x170] M[320x75] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]

Comments

To comment, please Log In or Join our Community .