Ethanol Blog

Uncertainty Seen in Ethanol Market Direction

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol traders are now grappling with even more confusion in the future market direction of the ethanol complex following the latest version of the weekly EIA report.

At the end of last week, ethanol inventory levels tumbled lower. This moved stocks to a 5 1/2-month low, falling 4.3% from last week levels. This currently puts total ethanol stocks just over 9% over year-ago levels.

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

Just a few short months ago, current inventory stocks were nearly 30% over year-ago levels, and traders were extremely concerned about excess supply levels. But the bullish news of falling stocks was countered with aggressive production gains.

This pushed production levels at the end of last week to record levels as per-day production is 6% ahead of year-ago levels. There is even more uncertainty as how the remainder of the summer driving season will turn out as overall gasoline demand has remained extremely volatile and breaking away from seasonal patterns over the recent past. This will likely add even more fuel to the price swings seen over the last couple of weeks, as traders take their eyes off of long-term market direction and get caught in the emotion and drama of immediate short-term market shifts.

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 .