September ethanol futures have quickly reacted to sharp gains in the corn market over the last two trading sessions with front-month ethanol futures posting a combined gain of 9 cents per gallon in early September.
This surge higher has pushed prices past August highs, and to the highest price level since the middle of July. The fact that this market move is not only counter seasonal, as it is developing when overall demand for gasoline and ethanol is slowing, but that strong corn production is still expected to be seen through the upcoming harvest, is likely not a loss on most traders.
Trade volume during the first two trading sessions in September has been light due to the upcoming holiday weekend, which is expected to be one reason for the unchecked price shifts, but traders are now extremely cautious as to just how markets will react early next week, as this will greatly affect the weekly price charts, but also continuous ethanol charts, causing markets to gyrate higher and lower while the general trend of the market may continue to erode during the upcoming weeks and months.
Rick Kment can be reached at firstname.lastname@example.org
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