Ethanol trade turned lower Wednesday following the latest round of EIA reports, which posted ethanol inventory levels rising to a four-year high at the end of last week.
Total stocks increased 4.3% in the last week of January, expanding the overall carryover of ethanol available to the market. This growing inventory levels comes at the same time as overall ethanol production levels continues to slip lower due to weak overall plant margins and the concern that the overall economics of ethanol production will not quickly change anytime soon.
Corn availability is not expected to change significantly through the coming weeks or months, and not giving producers any incentive to ramp up production at this time of year.
Overall, lackluster demand and abundant gasoline stocks are the main focus of the ethanol market and this will likely keep demand from rebounding any time soon. Ethanol futures are carrying a 40-cent premium to the RBOB gasoline market, and still margins remain in the red at many plants. This will continue to cause concerns through the near term, especially as overall demand for gasoline remains sluggish through winter and spring.
Rick Kment can be reached at firstname.lastname@example.org
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