Despite fractional ethanol losses Monday, ethanol futures continue to hold within a moderate trading range between $1.50 and $1.56 per gallon through the month of July. This support in the complex has focused on the variability in weather markets and volatility through the grain and corn complex, but also on recent strength in the RBOB gasoline and crude oil market.
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Over the last four weeks, RBOB gasoline futures have rallied 14 cents per gallon from the seasonal low, to current summer highs of $1.56 per gallon. Even though there may be some additional support possible in the market, seasonal pressure is likely to develop over the next couple of months as driving patterns will quickly slow when vacation plans come to an end and schools get back in session.
Ethanol futures fell 0.5 to 0.7 cent per gallon Monday, but the volatile price moves over the last two weeks surrounding outside market shifts has created some uncertainty in the complex, allowing ethanol traders to become market followers rather than leaders. Crop conditions and production costs will continue to be a major factor in overall short- and long-term ethanol price movement through the end of the month. But it is likely that ethanol futures may struggle to break out of the current market range.
Rick Kment can be reached at firstname.lastname@example.org
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