Ethanol Blog

Ethanol Rally Gains Momentum

Rick Kment
By  Rick Kment , DTN Analyst
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Ethanol futures have posted a strong 8-cents-per-gallon rally through the week after a sharp 14-cents-per-gallon loss over the last month. Beginning the week, ethanol prices were trading at more than a two-month low as widespread concerns about overall export demand and potential Renewable Fuel Standard (RFS) changes circulated and kept traders extremely nervous.

However, as traders returned from the weekend, ethanol markets with the help from sharp gains in energy markets have found renewed buyer support. This moved prices to $1.487 per gallon in front-month May contracts. The overall gains in the market focused on the ability to move current product through the system, but also on expectations that long-term demand for ethanol will continue to grow.

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In comparison, RBOB gasoline futures posted a strong 11-cents-per-gallon rally in the last week as buyers continue to focus on seasonal market support and the potential to spark some increased overall buyer activity to the complex. There is growing support for increased activity over the near future and this may add even more price gains during April.

According to the latest EIA data, ethanol supplies have fallen for four straight weeks. This is not unexpected, given the overall seasonal support that is building. But current levels at the end of last week are roughly 5% lower than year-ago levels.

Rick Kment can be reached at rick.kment@dtn.com

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