Ethanol Blog

Another Sign Summer is Winding Down

Rick Kment
By  Rick Kment , DTN Analyst

Following what has been an extremely stable market for ethanol during the last two weeks, EIA data released Thursday for the end of August has focused on growing ethanol inventory levels and production levels. But the week following Labor day also posted a 1% decrease in blender inputs. This is used to measure overall demand by the industry. Although demand still remains 2.2% over year-ago levels, due to steady-to-strong gasoline use through the summer, the trend of lower use appears to have started.

It is uncertain just how much short-term decreases will be seen through the ethanol or gasoline market within the next two weeks, but the trend to lower consumer demand and likely growing inventory levels has started, and will likely continue through most of the fall.

The fact that total inventory levels are still 9% over year-ago levels and production is nearly 13% over year-ago levels may keep the market more stable over the coming months, as tight supplies are not expected to be an issue for the industry any time soon. The combination of easing demand and another round of lower corn prices caused strong losses to develop in front-month contracts.

The premium in spot markets is quickly eroding as trades are not as concerned about the ability to get ample product when they need it.

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

(ES)

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