The light to moderate support in the corn market through the trading session Monday helped to draw additional buyer interest back into the ethanol market. Traders pushed nearby ethanol contracts as much as 1 cent per gallon higher.
Even with the weakness in front-month RBOB gasoline prices Monday, there seems to be a sense that ethanol traders are once again looking toward the corn market for direction.
It is uncertain just how much support can be drawn into the corn market through the rest of the week, but at this point it appears that nearby ethanol contracts could be establishing some well-rooted support near the $2.37 per gallon level.
Ethanol futures are currently trading just under 70 cents per gallon lower than the RBOB gasoline market, but this spread may slowly erode during the next few weeks. With more and more emphasis on overall spring and summer driving demand, and helping to boost gasoline and ethanol sales, more economic advantage may be given to the growing ethanol production seen during the last two weeks.
Rick Kment can be reached at firstname.lastname@example.org