Ethanol Blog

Traditionally the corn market is the driver in the market and the ethanol market seemed to gladly follow along the movement in overall production costs.

But that seems to be changing during the last two days, as corn prices seem to be keeping a close eye on the overall ethanol market.

Although the ethanol price in itself is not a major factor for the corn complex, the seemingly unchecked build-up in ethanol inventory levels seen during the last month continue to create widespread concern that the demand for corn by ethanol plants may be slowing, or have to slow significantly to dig the market out of the glut currently seen.

Ethanol production was on a very aggressive pace building inventory at the end of 2012, but at the end of last week there is already an 18% increase over year-ago levels. Ethanol production at the end of the last week decreased, but not by much, falling just a fraction of a percent from the week previous. This could create some significant changes in production for the near future, and this has the corn market on edge and looking for protection.

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

© Copyright 2012 DTN/The Progressive Farmer. All rights reserved.