May ethanol futures are trading at $1.61 per gallon, after falling nearly 5 cents per gallon over the last two weeks due to steady market erosion and lack of support from corn and energy issues through the last half of April. The RBOB gasoline futures complex has posted sizable price reductions with May contracts falling 14 cents per gallon in the same period, also to $1.61 per gallon. This inability to draw commercial or investment buyers back into the complex at a time when the summer driving season is just ramping up is creating some concern. RBOB gasoline price typically does not peak for another month. It is unclear if markets will start to stabilize during early May, or if liquidation will continue through spring, even though strong demand is expected due to consumer driving activity moving through summer.
With prices at the current levels, consumer demand will not likely to be changing much with narrow to moderate shifts in market moves. Inventory and production levels may be the main instigators of price shifts over the next several weeks, but even these may not have a major effect.
Rick Kment can be reached at firstname.lastname@example.org
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