Ethanol Blog

Tight Supplies Push Prices Higher

By Rick Kment , DTN Analyst

Ethanol inventory levels across the country continue to erode based on firming demand and lower production. Total ethanol stocks fell an additional 8.4 million gallons in the first week of May. This is a 1.5% drop from the week previous. Total ethanol inventory levels are 21% lower than year-ago levels, listed at 705.6 million gallons.

The fact that overall stocks are falling at a pretty steady pace, at the time when overall demand for product is starting to build, could create additional tightness through the market. Ethanol prices responded by increasing 1 to 2 cents per gallon on Wednesday.

But further support is likely to be seen as stock levels are expected to continue to drop. Ethanol production is falling to at this point. The strong basis levels seen through the market and still narrow processing margins for ethanol producers are not encouraging significant production growth at this time. The recent volatility in the corn market and uncertainty about future supplies due to growing conditions may keep production levels from building rapidly through the near future.

Rick Kment can be reached at


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