Ethanol futures ended essentially directionless Wednesday following fractional gains in nearby ethanol contracts, clearly offset by similar losses in different contract months.
The weekly release of EIA through the end of last week posted inventory levels increasing 2.2% from the previous week. This created a strong surge of ethanol from year-ago levels of 12%, which is a significant jump from where it was just a week ago.
While inventory levels rallied higher, so did demand, which shows some support that overall seasonal strength continues to help offset the growing supplies. But there is concern that the spike in demand will not be able to rise fast enough to offset the gains, as demand typically peaks in nearly two months.
Ethanol production slipped for the second week in a row, helping support nearby price levels, especially spot April contract prices. Although the tone in the energy market remains stable, traders remain concerned with growing supplies through the spring and summer months. This may continue to limit buyer activity from moving into both the crude oil and RBOB gasoline markets in the near future.
Rick Kment can be reached at firstname.lastname@example.org
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