Ethanol futures fell sharply lower once again Wednesday afternoon, with June futures settling at $1.456 per gallon. This two-day market slide essentially offsets the previous week's market rally that drew aggressive buyer support back into the market, and created renewed buyer interest back into the ethanol complex. The focus on sharply higher RBOB gasoline futures, which have rallied 12 cents per gallon over the last two weeks, has helped to draw commercial buyer support back into the complex over the short term.
The most recent EIA data released Wednesday posted ethanol inventory surging 1.3% at the end of last week, which is 10.9% ahead of year-ago levels. Plant production levels at the same time remained increasingly strong, growing by 2.1%, helped by the fact that lower corn costs are fueling ability for plants to gain access to corn. However, the recent move lower in the ethanol market has now retested long-term support levels.
A move below $1.44 per gallon would break through 2017 lows, but also would be the lowest price level seen ethanol futures since September 2016. This would leave the next major support level of $1.375 per gallon set in August of 2016. With recent outside market pressure, and corn market pressure quickly developing in the complex, these support levels are anything but secure.
Rick Kment can be reached at firstname.lastname@example.org
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