Ethanol Blog

Ethanol Futures Find Support in Rising Corn Prices

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol futures have rallied higher during the first week in June, with traders focusing on the renewed strength in corn markets as the main focus behind the new-found buying interest.

Corn futures, which rallied another 4 1/2 cents per bushel Thursday, have increased 12 cents per bushel so far in the first week of June. This creates the expectation that overall production costs of ethanol will continue to rise as summer continues.

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Even though recent development of higher ethanol production has not created a pullback in ethanol price moves, traders continue to focus on short-term inventory reductions helping to keep supplies in check.

Ethanol futures gained nearly 2 cents per gallon Thursday, accounting for a nearly 6-cents-per-gallon rally in the last four trading session. Although gasoline and crude oil prices have faded lower late in the week, the interest in ethanol markets has to do more with corn market activity and any long-term changes in inventory than the energy market price moves at this point. Based on the significant discount ethanol futures are holding the RBOB gasoline market, it is unlikely that moderate price shifts in RBOB gasoline prices will have much direct impact in short-term moves of ethanol markets.

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

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