As ethanol stocks continue to tighten heading into the Memorial Day holiday, ethanol prices are gaining on the price of RBOB gasoline.
The recent support in the corn market and increased holiday demand is helping to draw buyers back into the ethanol markets during the last two days. This is creating additional support in the price. The ethanol to RBOB gasoline price spread is the discount that ethanol is trading to the RBOB gasoline market. The current price spread is holding ethanol at a 20-cent discount to the RBOB gasoline market.
This is not yet limiting buyer demand due to the overall tightening supplies across the country. This is a decrease from a 74-cent discount in April, and compared to a 77-cent-per-gallon discount at this time last year. The tight supplies and potential support in corn markets could continue to draw ethanol and gasoline prices closer. But there is growing uncertainty of what will happen to price support following the Memorial Day holiday.
Rick Kment can be reached at firstname.lastname@example.org
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