Ethanol inventories tightening during fall months

By Rick Kment | October 11, 2013

Sept. 30—Even with cost of production slowly slipping lower due to corn prices hovering around $4.50 per bushel, ethanol inventory levels continue to shrink. The general trend of the market is to push supplies lower, although this movement is very inconsistent from week to week. Lower ethanol production, combined with generally strong product movement following Labor Day is helping to draw buyers back into the market and keeping long-term supplies limited. If this tightness continues to be seen through the end of the year, additional ethanol market support is likely as buyers try to gain access to more product to meet future demand. But even though ethanol supplies have dropped, moderate price pressure has been seen in both ethanol and gasoline markets over the past month. This could create some back and forth price movement through the fourth quarter. Size and quality of this year's corn crop will have a major impact in ethanol price direction in the next six months.