Ethanol futures have posted moderate gains each of the last two trading sessions. This is the first move higher seen in front-month February futures since before the Christmas holiday, and could be helping to draw additional widespread support back into the market which has been on a downhill slide for nearly two months.
However, there continues to be challenges to overcome in the ethanol market, like very large inventory stocks and poor processor margins. Ethanol prices have moved nearly 4 cents per gallon higher this week, while corn prices have moved just 9 cents per bushel higher in the same amount of time.
There is growing uncertainty surrounding Friday's release of the USDA report, which has the potential to put corn market prices in a tailspin during the next week.
This could cause additional precautionary buying through the ethanol market during the next two trading sessions.
Rick Kment can be reached at firstname.lastname@example.org
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