Commodities: Ethanol prices remain range bound

By Rick Kment, DTN | April 28, 2015

Ethanol prices have moved around in a choppy pattern over the last month, following the gyrations of gasoline prices as well as short-term moves in the grain markets. The market has been consistently locked in a 10-cent-per-gallon trading range that appears to be willing to hold through the near future.

Gasoline prices, on the other hand, have continued to gain buyer momentum with quotes moving to $2 per gallon level in front-month futures contracts for the first time since late 2014. This rebound in buyer support is driven by falling inventory levels and the expectation that strong demand for gasoline will continue through the spring and early summer months.

Ethanol futures have hit resistance as expected large planted acreage for corn and subsequent falling corn prices are lowering the fuel's production costs and allowing for even more ethanol production through spring months. This will likely add to the already heavy supplies available to the market, and the expected strong gasoline demand will do very little to interest ethanol buyers over the near future.     

 

Gasoline Prices (By Region)

REGION

SPOT

RACK

West Coast

$2.4895

$2.7465

Midwest   

$2.0295

$2.4379

East Coast

$1.8634

$2.6407

Front Month Futures Price (RBOB) $2.0090

 

Ethanol Prices (By Region)

REGION

SPOT

RACK

West Coast

$1.7900

$1.8500

Midwest   

$1.5700

$1.7450

East Coast

$1.6700

$1.7740

Front Month Futures Price (AC) $1.6090