Ethanol Blog

Corn prices, which are the single largest factor in ethanol's cost of production, remained extremely stable through the first three months of 2015.

This allowed little concern about changing ethanol production plans as prices remain slightly under $4 per bushel in front-month futures contracts. Since mid-January, the weekly chart prices for corn remained locked in a 17-cent trading range. These back-and-forth shifts through the complex helped create some much-needed stability in the ethanol complex as production pushed higher through most of the spring.

But compared to the consistency in corn prices, ethanol futures varied widely, moving in a near 20-cent price range in the same time period. The variation between corn and ethanol prices market shifts is seen as concerns of oversupply are countered with growing gasoline demand expectations.

If corn prices would have become more volatile, ethanol price shifts are likely to have been significantly much wider through the last three months. Weather markets which focus on planting progress of corn will likely be the driving force behind any significant move outside of the previous corn market range, although for the short term, it may not create significant impacts to ethanol markets.

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

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