Ethanol Blog

Ethanol Market Direction Turns Uncertain as May Contracts Take Over

Rick Kment
By  Rick Kment , DTN Analyst

Ethanol futures moved sharply lower Thursday as traders focused on May taking over lead month in futures contracts. This is leaving uncertainty across the market and may cause additional liquidation through the next several days and weeks. May futures posted a 3.5-cent-per-gallon loss, moving to $1.61 per gallon, while all contract months posted aggressive losses during late-week trade. The expectation that the upcoming summer demand would actually draw down supplies and continue to push prices higher is contrary to the current market movement as traders have continued to see increased market resistance at and above the $1.60-per-gallon level. This may continue to be seen as deferred trade seems more comfortable near the $1.50 per gallon level than near $1.60 per gallon and is likely to trend toward that price point through the spring and summer months. At the same time that ethanol markets are moving lower, RBOB gasoline prices have trended higher with markets posting 1- to 2-cent-per-gallon gains Thursday based on firm seasonal buyer support and moving near $1.75 per gallon. The firm but steady moves in the energy market may help to draw buyer support back into the rest of the commodity complex, but this may not help to draw longer-term support back into corn or ethanol markets.

(ES)

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