Ethanol Blog

For the third straight week in a row, ethanol inventory levels continue to drop. Total supplies were listed at 646 million gallons, and 20.1% lower than year-ago levels.

This is a reduction of 4.2 million gallons from week-ago levels. The focus in the futures market is on the potential for tighter supplies, but given that ethanol markets have had to worry about a glut heading into the end of the year during the last two years, most are focusing on market stability rather than pushing prices aggressively higher.

Production of ethanol the first week of October decreased nearly 300,000 gallons per day. This is still 8.5% over year-ago levels, but indicates a lack of interest for ethanol producers to aggressively push the envelope as corn prices soften.

Ethanol prices responded positively Wednesday, but far less aggressive than one would have thing given ethanol inventory levels as low as they are. There remains a lot of uncertainty given the size and quality of corn crop new starting to be harvested. Any aggressive price support in ethanol markets will likely be after corn harvest is completed. Uncertainty about the future of the renewable fuel standard is also keeping traders second-guessing overall market direction in ethanol futures.

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

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