December ethanol futures are within a fraction of a cent of surpassing the summer high in the December contract as prices surged to $1.601 per gallon during the early part of Thanksgiving week in response to firm buyer support in corn markets and aggressive triple-digit gains in the crude oil complex.
December contracts peaked in June at $1.607 per gallon, before quickly working lower through early August. The counter seasonal market support seen through November in both the ethanol and RBOB gasoline markets is not only focusing on the potential late year buyer support that may be sparked by consumer buying patterns. It's also on potential that buying patterns may change due to the political changes developing and trade changes that may be implemented in the months and years ahead.
Although there is still much unknown, the nervousness of the market is creating buying activity in the energy market. With RBOB gasoline markets now trading above $1.40 per gallon and gaining 13 cents in the last seven trading sessions, while crude oil futures are above $48 per barrel after a $4-per-barrel rally, the potential for increased market volatility through the end of the year continues to develop. Ethanol is likely to follow the direction of the energy markets, but it may limit long-term support of the market if prices move too high over the short term.
Rick Kment can be reached at firstname.lastname@example.org
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