Ethanol prices were unable to move in a very wide pattern with nearby and deferred contracts stuck in an extremely narrow path, stuck between 0.3 and 0.6 cent per gallon.
The pressure in prices was affected by the holiday delayed release of the EIA report which posted ethanol inventory levels increasing at the end of last week. This is a 7.6% increase over year-ago levels, and although at this point is not enough to create significant concern, the lack of underlying support in energy markets is limiting overall buyer support through the market.
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Ethanol production did fall at last week. This is the lowest level seen in the last five weeks, indicating that the recent rise in corn market prices and overall narrow ethanol margins is starting to affect overall production levels at the plant.
The production levels at this point are something that are likely going to be harder to turn around, given that margins have remained weak through the last couple of months, and demand for gasoline and ethanol will not likely improve significantly for at least several weeks.
This could allow for increased ethanol supplies and lower production to be seen over the next few weeks, which is likely to put even more pressure on market prices in the near future.
Rick Kment can be reached at firstname.lastname@example.org
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