Ethanol futures ended the week 3.2 cents per gallon lower for the week. But buyer support quickly developed through the last half of the week. This cut early losses in front-month futures nearly in half, and the main driver behind this shift has been an improving gasoline market outlook.
The latest EIA numbers released midweek posted a change in direction in overall gasoline inventory levels and implied demand for gasoline at the end of last week. This has created the expectation that overall gasoline demand, which still remains seasonally sluggish, is making up ground from a lackluster March and April.
In all, RBOB gasoline futures rallied 6.25 cents per gallon for the week. Any increased support in overall gasoline demand will have a significant impact in ethanol use.
Although the tie between ethanol and corn prices remains extremely close, trades appear to be more focused on the movement in the gasoline market during the last two weeks. This could help to draw additional widespread support into the ethanol market early next week, if commercial gasoline buying continues.
Rick Kment can be reached at firstname.lastname@example.org