Ethanol futures quickly rallied 3 cents per gallon Monday following the inability to draw additional selling pressure into the market early in the week.
The move higher in late October is helping to solidify support price levels at $1.38 per gallon. With markets testing support levels of $1.38 per gallon over the last week, ethanol futures have continued to trade at the lowest price in over a year. It is uncertain just how much long-term support will develop in nearby or deferred ethanol futures through the next several weeks. However, with corn futures unable to find significant buyer support through the harvest season and strong buying holding firm in energy markets, it appears that ethanol futures could continue to trade in a moderate trading range between $1.40 and $1.45 per gallon.
Even with the renewed buyer interest seen in the ethanol complex, ethanol futures continue to hold a significant discount to the RBOB gasoline price. This discount remains near 30 cents per gallon and at the highest levels consistently seen in the market since 2015.
Traders continue to focus on the availability of ethanol on the market at a time when overall demand is starting to stabilize. The overall support by commercial traders may continue to hold current buyer interest and may spark additional underlying activity over the coming weeks.
Rick Kment can be reached at firstname.lastname@example.org
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