Ethanol Blog

Ethanol prices posted a strong bounce on the futures market Wednesday following support from energy markets and higher demand at the end of last week. The moderate to strong pressure in corn prices midweek was unable to shake the support seen through ethanol markets, which increased 1 to 3 cents per gallon in nearby contract months. June futures continue to lead the market higher, gaining 3.3 cents per gallon and closing at $2.166 a gallon. The most interesting news, though, came in the weekly EIA report, which posted higher demand, production and inventory levels at the end of last week. The demand side combined with higher price shifts is bullish for the market, but the growth in ethanol production and stocks typically will limit buyer support through the market. Inventory levels increased 0.9% over last week, but the shift compared to year-ago levels is now accounting for a 5% premium over inventories in early May 2013. So far, the ethanol market is not overly concerned about the building stocks as demand is expected to continue to increase through the next month, hopefully helping to stabilize the market through the rest of the summer. Blender inputs increased 5.2% over week-ago levels, helping to spark the bullish tone of the market.

Rick Kment can be reached at rick.kment@dtn.com

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