Ethanol Blog

Ethanol price moves in the front-month April contracts were anything but impressive Monday. Even with corn futures replacing moderate early losses with moderate gains at closing bell, front-month ethanol held only fractional gains.

But the momentum started during the last two weeks has carried through the market. Even though front-month contracts were muted Monday by early week positioning, the solid gains in other nearby contracts helped to carry the weight of an expanding ethanol market.

The focus through the market remains based on expected demand support through the summer contracts. This is what has pushed front-month contracts over $2.60 per gallon. The demand support is also what has narrowed the RBOB to ethanol price spread to under 50 cents.

This is a 20-cent drop in the last two weeks. There is growing expectations that overall ethanol production may not grow as fast as earlier expected through summer. This could quickly move the market into a tight supply situation, driving additional premium into the ethanol markets.

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