Ethanol Blog

Once traders returned to work following the Easter weekend, aggressive buying developed across the energy complex. A portion of the buying seen in the market is based on expectations that overall crude oil supplies worldwide will not quickly change even after the trade deal has been signed with Iran.

It will take time before Iranian production is ramped up to be an major factor in export markets; this could have very little impact in the spring and early summer supplies of gasoline.

Light trade is also expected to have been seen through most of the energy markets with uncharacteristic uniformity seen in all nearby RBOB gasoline contracts. Ethanol traders showed very little interest in the light-to-moderate pressure in corn prices early in the week as most buyers quickly flocked to the aggressive surge in energy prices.

This is helping to create the expectations that overall supplies will continue to tighten based on increased demand through April. Part of the shift in the market continues to be mental, as the traditional spring market activities are expected to start, and traders look toward the spring and summer driving seasons. But even if strong buying continues over the next two days, or traders start taking protection, market volatility is likely to become increasingly obvious over the next few trading sessions.

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

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