Strong buyer interest quickly stepped into the ethanol complex Monday morning which was driven by support developing in corn futures prices following the weekend.
Corn prices traded 3 to 7 cents higher in nearby contracts through most of the trading session as any post-report pressure was unable to make it to the surface. Traders seemed to put any focus on a bearishly large production estimate out the door with no significant shift expected in the near future.
Ethanol futures rallied 2.2 cents per gallon Monday afternoon in response to corn futures closing 4 cents per bushel higher. Ethanol futures posted a 7-cent rally through the first two weeks in August, and the renewed support in corn and RBOB gasoline futures is pointing to expanded support possible through the last half of the month.
A break above $1.43 per gallon in front-month September ethanol contracts could spark unrestricted support over the next week as traders put minimal attention on seasonal demand and are more focused on potential production costs and keeping ethanol markets aligned with the recent rise in energy prices.
Rick Kment can be reached at firstname.lastname@example.org
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