Ethanol Blog

Early 2016 Sets New Contract Lows in Ethanol

By Rick Kment , DTN Analyst

Ethanol futures fell 8.6 cents per gallon in front-month February futures during the first week in January, setting contract lows four out of five of the last trading sessions.

The focus on growing ethanol supplies and eroding seasonal demand of both ethanol and gasoline demand has caused traders to quickly back away from the market.

There will continue to be some additional weakness through the market over the near future as prices are likely to try to find some underlying support through the next two months. RBOB gasoline futures fell 14 cents per gallon during the week as inventory levels increased sharply during the last week of the year.

The expectation is that additional weakness will continue to develop now that aggressive outside market pressure is seen in the stock market. With the losses this week in the stock market, there are concerns that consumers may not be willing to step back into the market due to fears that additional pressure will be seen in the near future.

The next two weeks will be like walking on thin ice as many will remain very concerned that an aggressive market tumble will continue to develop and could cause a major collapse of most other markets around the energy complex.

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

(ES)

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