Ethanol Blog

Ethanol Production Sliding Lower

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol prices jumped higher based more on outside markets than the direction of ethanol market fundamentals. But the pullback in ethanol production at the end of last week has led to additional expectations that supplies may start to erode lower, allowing inventory levels to fall long term. Total supplies are still running nearly 30% over year-ago levels, but the sharp rally across the energy market based on increasing demand could help to bring further support to the entire ethanol complex. Ethanol production fell 1.3% at the end of last week. This accounts for the lowest production in six weeks, indicating that the trend of strong production is starting to fade. Even though inventory increased slightly at this point, the focus on growing demand through the upcoming weeks could spark additional market activity and may keep buyers active. Nearby RBOB gasoline futures posted a double-digit market rally. This is being viewed as bullish with traders focusing on even tighter supplies over the next couple months. This recent market support may be enough to draw long-term buyer support back into ethanol futures and move prices through resistance levels over the next couple of weeks.

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

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Rick Kment