Ethanol Blog

The request for the EPA to reduce the RFS (Renewable Fuels Standard) was denied Friday following an extensive focus on the effects of ethanol production on overall corn prices, and the economic impact on all industries. In its announcement, the EPA said that suspending the standard would reduce corn prices by only 1%. Most in the market and the ethanol industry were not surprised by the announcement, but the market responded to the news as the uncertainty about the future of the RFS has dissipated, at least for the time being. Corn futures closed 5 cents per bushel higher, but bounced back from a 10-cent loss in early trade, causing a 15-cent-per-bushel correction following the news. This helped to spark additional buying activity in ethanol futures also. Even though ethanol prices were limited to 1- to 2-cent-per-gallon gains, the general tone of the market firmed on the expectation that the market will continue to move as previously planned over the near future.

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

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