Ethanol prices under pressure

Ethanol Report
By Rick Kment | July 11, 2013

July 1—Ethanol futures prices have tumbled nearly 40 cents per gallon over the past month following the lack of support in the market and moderate production gains through the complex.

Traders expected ethanol supplies to be tight through the summer, causing futures to post a strong rally around the Memorial Day holiday. But in the weeks leading up to the Fourth of July holiday, ethanol supplies have started to rebound slightly and production has increased moderately. This is driving prices down near $2.40 per gallon at the end of June, which is a significant drop from spring price levels just before the summer driving season.

Traders are looking for additional support in overall economic factors. This may limit any additional wide price movements through the month of July. The focus in the ethanol market has been placed on market stability rather than tight supplies. Gasoline prices have bounced higher and lower over the past couple of weeks, but remain in a relatively tight range with no short-term direction yet seen in the market.