No matter if you are following the ethanol price moves closely, as in a daily chart kind of way, or on a broader scale similar to what may be seen in a weekly chart: It is easy to tell that something has changed in the market.
Through the week, ethanol futures have moved steady to lower each of the trading sessions this week, closing at $2.54 a gallon. In the weekly chart, which tends to be more indicative of the overall general tone of the market, prices fell 8.5 cents per gallon. This was the first time in more than a month that ethanol prices have slipped lower.
This could be explained as a general market pullback as profit taking and positioning is taking place. But when you look at the consistent and sharp drops on a daily basis, this reasoning appears shaky.
The strong change in weekly price moves could also be seen as uncertainty about future demand at a time when overall production costs are once again rising. The RBOB gasoline price fell 10 cents per gallon through the week, and corn prices gained 9 cents per bushel during the same week. Outside market concerns are once again shaking the resolve of the energy market with questions about economic strength.
Bad memories of 2012 and stalling gasoline and ethanol demand through the summer driving season has quickly regained the attention of many traders. The direction of the ethanol market during coming weeks will likely depend on how much support many of these traders put in potential demand damage being done by global economic factors in Europe.
Only time will tell where the market will move through the rest of the spring and summer, but this week may have been a significant turning point in the ethanol market.
Rick Kment can be reached at firstname.lastname@example.org