Ethanol Blog

Ethanol futures continue to post sharp losses Tuesday. Following double-digit corn market losses, front-month ethanol futures fell another 5.7 cents per gallon.

This has pushed ethanol markets nearly 20 cents per gallon lower over the last five trading session. This strong rally in front-month futures through the first couple weeks of July is coming unraveled. Two factors are the main focus of this recent market sell-off. First, corn prices have started to erode with less focus on the hot dry conditions and potential yield losses. This has cut production costs of ethanol.

Ethanol traders are also focusing on a build-up of ethanol inventory levels over the last week. This creates concerns that tight supplies may not continue through the rest of the summer. It also causes some uncertainty about current and future ethanol demand.

If ethanol demand starts to fade through the rest of the year, market prices will likely see additional pressure while inventory levels once again grow.

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

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