Hot, Dry Weather Impacting Ethanol Markets

By Rick Kment | September 23, 2013

Sept. 3—The month of August reminded everyone that summer had finally arrived. The concerns about cool and wet weather still were fresh in traders and corn producers’ minds when hot dry conditions seemed to flood over most of the Corn Belt. Sharp price shifts developed in both the corn and ethanol futures markets. Corn prices moved more than 30 cents higher over the past couple of days with concerns that the corn crop will not finish well due to the heat, resulting in lower yields. 

Ethanol markets are seeing wide price shifts with higher production costs on one hand, while eroding summer demand is weighing heavily on the market. Trades are expected to continue to remain volatile during the month of September, as crop conditions and long term ethanol production plans are a significant gamble. Ethanol futures prices continue to trade in a wide range but are unable to sustain support above $2.50 per gallon, despite renewed buying activity in gasoline prices.